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INDIANA
STATE LIBRARY
Digitized by the Internet Archive
in 2010 with funding from
Institute of Museum and Library Services under the provisions of the Library Services and Technology Act; Lyrasis
http://www.archive.org/details/messagespapersre65wall
GOVERNOR DAVID WALLACE
MESSAGES AND PAPERS
1837-1840
INDIANA HISTORICAL COLLECTIONS
VOLUME XLIII
INDIANA LIBRARY AND HISTORICAL BOARD
Lyman S. Ayres, President
Dick Heller, Jr., Secretary
John P. Goodwin John E. Horner
Mrs. Benjamin Saks
HISTORICAL BUREAU
Hubert H. Hawkins, Director
Dorothy Riker, Gayle Thornbrough, Editors
David Wallace
MESSAGES AND PAPERS
relating to
the Administration of
DAVID WALLACE
Governor of Indiana
1837-1840
Edited by
Dorothy Riker
INDIANA HISTORICAL BUREAU
Indianapolis 1963
INDIANA
STATE
LIBRARY
INDIANAPOLIS
Copyright, 1963
by the
Indiana Historical Bureau
J,
v. £>
COh, S~
INDIANA STATE LIBRARY
EDITORIAL NOTE
The present volume is a continuation of the series of Gover-
nors' Messages and Papers which have been published over a
thirty-year period by the Indiana Historical Bureau and its
predecessor, the Indiana Historical Commission. The first two
volumes were devoted to the territorial governors, William Henry
Harrison and Thomas Posey, the third to Jonathan Jennings,
Ratliff Boon, and William Hendricks who served from 1816 to
1825, the fourth to James Brown Ray, 1825 to 1831, and the fifth
to Noah Noble, 1831 to 1837. The term of office of the governor
and lieutenant governor under the Constitution of 1816 was three
years. Unlike his two predecessors, David Wallace served only
one term, from December, 1837, to December, 1840.
With scarcely any manuscript material to draw on, the editor
has had to rely chiefly upon printed sources in compiling the
present volume. Wallace's messages to the General Assembly are
reproduced from the House and Senate Journals; reports of other
state officials, of members of administrative boards, and of legis-
lative committees are taken from these and from the Documentary
Journals compiled for each session of the Assembly.
There are some fragments of Wallace's official correspondence,
mostly regarding appointments, in the Archives Division of the
State Library. A sampling of these have been included in the pres-
ent compilation. The Lew Wallace Papers in the William Henry
Smith Memorial Library of the Indiana Historical Society contain
two or three personal family letters of David Wallace; there
are a few letters in the John Tipton Papers in the Indiana State
Library, and at least one in the Samuel Judah Papers in the
Lilly Library at Indiana University. Letters of inquiry to libraries
and archives in adjoining states failed to bring forth any corre-
spondence that Wallace might have had with officials or persons
in those states.
The Noah Noble Papers in the State Library, which were
drawn on extensively for the preceding volume of Governors'
(v)
Wallace Papers
Messages and Letters, have also been used in the present compila-
tion. Noble stepped down from the governorship to become head
of the powerful Board of Internal Improvement; his correspond-
ence with Fund Commissioners, contractors, and other state
officials throws considerable light on this important aspect of
Wallace's administration.
Since very little biographical material concerning Governor
Wallace is available in printed form, such information on his
early life as could be found has been included in the Introduction
to the Messages and Papers.
CONTENTS
Page
Introduction 1
Messages and Papers 53
Index 479
ILLUSTRATIONS
David Wallace Frontispiece
Governor's Mansion facing 18
(vii)
INTRODUCTION
INTRODUCTION
David Wallace was inaugurated as Indiana's sixth governor
on December 6, 1837. He served one term and was succeeded
by Samuel Bigger on December 9, 1840.
Family Background
Wallace was born in Mifflin County, Pennsylvania, on April
4, 1799, the son of Andrew and Eleanor or Ellen (Jones)
Wallace. The father was a native of Carlisle, Pennsylvania ; the
mother was a niece of John Paul Jones, naval hero of the Revolu-
tionary War. They were married in 1798 and David was their
first child.1
By 1807 the family (now consisting of a daughter and three
sons) had moved to Miami County, Ohio, where Andrew
Wallace surveyed the towns of Troy and Greenville and served
four years as the county's first treasurer.2 David attended school
in Troy; one of his classmates was Sarah Hill, a little girl two
years younger than himself, whom he was to meet again in Indi-
anapolis as Mrs. Calvin Fletcher.3 During the War of 1812,
Andrew Wallace contracted to supply provisions for William
Henry Harrison's army.4
In November, 1813, we find the father in Cincinnati, where
he purchased a part interest in the Liberty Hall newspaper and
published it with J. H. Looker from November 16, 1813, to
1 Genealogy of Wallace Family; sketch of David Wallace by his
son, Lew Wallace; notes on Andrew Wallace, gathered by Caroline
Dunn, all in Indiana Historical Society Library.
2 History of Miami County, Ohio . . . (Chicago, 1880), 281, 375;
Bulletin of the Historical and Philosophical Society of Ohio, 7: No. 1
(January, 19+9), 23-24.
3 Calvin Fletcher Diary, July 17, 1835, in Indiana Historical Society
Library.
4 Lew Wallace, sketch of David Wallace.
(3)
Wallace Papers
December 11, 1815. 5 He had the opportunity of continuing his
acquaintance with General Harrison during these years and in
1817 Harrison, then a representative in Congress, made available
to Andrew's oldest son an appointment to the United States Mili-
tary Academy at West Point. Young David, now eighteen,
enrolled in September, 1817, and was graduated four years later
with the rank of second lieutenant. He evidently made a good
impression for he was invited to stay on at the school as an
instructor. This he did for a year and then resigned at the end
of May, 1822, and rejoined his family.0
About the time that David left for West Point, the Wallace
family moved to Brookville, Indiana, where Andrew took over
the management of one of the town's taverns.
Franklin County, of which Brookville was the county seat,
was described in 1817 as one of the best counties in Indiana.
"Here are some of the finest farms to be met with in the western
country. . . . The soil is free from stones and easily cleared and
ploughed; producing fine crops of wheat and corn." Brookville
was in the midst of a building boom. In addition to some eighty
residences, most of which had been built in 1816-17, the Wallace
family found a grist- and two sawmills, two fulling mills, three
carding machines, a printing office, silversmith, two saddlers, two
cabinetmakers, one hatter, two tailors, five taverns, and seven
stores. There was also a jail, market house, and a handsome brick
courthouse. Many emigrants looking for a new home were
attracted by the growing prosperity and importance of the town.7
After the Indian land cession of 1818, Andrew Wallace secured
employment as a surveyor of these lands.8 When they became
available for purchase, a land office was opened at Brookville.
5 Charles T. Greve, Centennial History of Cincinnati ... (2 vols.
Chicago, 1904), 1:790; Clarence Brigham, History and Bibliography of
American Newspapers, 1690-1820 (2 vols. Worcester, Mass., 1947), 2:791.
6 Lew Wallace, Sketch of David Wallace, and Papers of David
Wallace, in Lew Wallace Papers, Indiana Historical Society Library;
List of Officers of the Army of the United States from 1779 to 1900 . . .
(New York, 1900), 653.
7 Harlow Lindley (ed.), Indiana As Seen by Early Travelers . . .
(Indiana Historical Commission, 1916), 149-50, 202.
8 See letters of recommendation of Andrew Wallace and others
Introduction 5
Lawyer and Legislator
When David rejoined his family in the summer of 1822, he was
faced with the task of seeking a vocation. The leading men in
the community were lawyers who seemed to have plenty of
business, and David set about studying law in the office of Judge
Miles C. Eggleston. The judge was a Virginian, a graduate of
William and Mary College, and judge of the third judicial dis-
trict. After about a year the young law student was admitted
to practice.9
With his West Point training, Wallace was no doubt a wel-
come addition to the local militia company. He was elected
lieutenant of the seventh regiment shortly after his arrival in
Brookville, was advanced to captain in 1825, and to colonel in
1827. 10 He also found time to enjoy the social life of the com-
munity and to court Esther French Test, the daughter of John
Test, a prominent lawyer who was serving in Congress. The
young couple were married November 10, 1824.11 Either before
or shortly after the marriage, Wallace became a member of his
father-in-law's law firm. Four sons were born to David and
Esther: William in 1825; Lewis (or Lew) in 1827; John in
1829; and Edward in 1831.12
David apparently achieved a reputation among his fellow
townsmen as a good citizen and competent lawyer; in 1828 and
the two following years he was chosen to represent them in the
addressed to Edward Tiffin, Surveyor General, in General Land Office,
Surveyor General, Letters Received, Vol. 7, in National Archives, Wash-
ington, D. C. ; Andrew Wallace, Brookville, to George P. Torrence,
Cincinnati, October 20, 1818, in Torrence Papers, Library of the Ohio
Historical and Philosophical Society. Wallace did some surveying in the
present Hamilton County. Charles N. Thompson, Sorts of the Wilderness.
John and William Conner (Indiana Historical Society Publications, Vol.
12, Indianapolis, 1937), 129.
9 Franklin County Circuit Court, Order Book, 1823-25, in Courthouse,
Brookville; Blanche G. Garber, "Judge Miles Carey Eggleston," in
Indiana Magazine of History, 17 (1921) : 2+3-56.
10 Record of Military Commissions, November, 1822, to October, 1847,
in Archives Division, Indiana State Library.
11 Transcript of Franklin County Marriage Records, 1811-52, in
Genealogy Division, Indiana State Library.
12 Genealogy of Wallace Family, cited above.
JVallace Papers
lower house of the General Assembly. In Indianapolis he met his
former neighbors, Noah Noble, receiver in the land office which
had been removed from Brookville to Indianapolis, and Governor
James B. Ray.
One of the measures before the General Assembly in the
1828-29 session concerned the construction of the Wabash and Erie
Canal. At the previous session the state had accepted the land
grant offered by the Federal government for construction of a
canal connecting Lake Erie with the navigable waters of the
Wabash River, with the stipulation that construction would begin
within five years. The act of acceptance provided for a board of
three commissioners who were to locate the route, make estimates,
lay off town sites, etc.13 It remained for future legislatures to
grant them authority to proceed with construction. Although
Wallace's constituents were indifferent to the construction of a
canal in the northern part of the state, the youthful legislator
identified himself with the friends of the measure. He was some-
what fearful that this might cost him his re-election but opposition
failed to materialize. Perhaps as something of a reward, Wallace
was chosen in 1829 by Indian Agent John Tipton, a zealous
advocate of the canal, to represent the state in the trial of a
Miami Indian accused of murder, for which he received $150
as his legal fee.14
Wallace continued to support measures for construction of the
canal, but it was not until the 1831-32 session that an act was
passed, supplemental to the 1828 act of acceptance, which put the
project on its feet. A Canal Fund was created and placed in
charge of three Fund Commissioners. Money was to be borrowed
at an interest rate not exceeding 6 per cent, the principal and
interest to be repaid in time from the money received from sale of
the land granted the state and from tolls and water rights.15
13 U. S. Statutes at Large, 4 (1823-1835) : 236; Laws of Indiana, 1827-
28, pp. 10-12; Logan Esarey, A History of Indiana ... (2 vols. Fort
Wayne, 1924), 1:404-5.
14 The John Tipton Papers (Indiana Historical Collections, Vols. 24-
26, Indianapolis, 1942), 2:232, 276-77, 300-1.
15 Lanvs of Indiana, 1831-32, pp. 3-8; Esarey, History of Indiana,
405-7. The Fund Commissioners were to be appointed by the governor
Introduction 7
During the 1830-31 session of the General Assembly, Wallace
was one of five members chosen by the House to work with a
like number from the Senate on a revision of the laws.10
Lieutenant Governor
Ray's term as governor was to expire in 1831. He had been
elected in 1825 and again in 1828 as an Independent. But by
1830 party lines had been drawn to such an extent that future
gubernatorial candidates found it necessary to have the backing
of a political party as well as personal popularity. Noah Noble,
who had been ousted from the Indianapolis Land Office by Presi-
dent Jackson's Spoils System, was the choice of the National
Republicans or Adams-Clay men for governor. It was no doubt
with his approbation, if not at his suggestion, that Wallace was
chosen to run for the second place on the ticket. James G. Read, of
Daviess County, and Ross Smiley, of Union County, were the
candidates of the Democratic Republicans for governor and lieu-
tenant governor, respectively. Milton Stapp and James Gregory
ran as independent candidates for the two offices.
Although the state was Jacksonian on national questions, the
personal popularity of Noble and Wallace was sufficient to over-
balance this fact and win the election for them. The three Con-
gressmen elected at the same time were all Jackson men. Wallace
thus returned to the legislative halls in December, 1831, to begin
his first term as presiding officer of the Senate. W. W. Woollen,
writing in 1883, said of him: "Indiana never had a Lieutenant
Governor who excelled him as a presiding officer, and but few
who equaled him. His voice was good, his manner dignified, and
his decisions just and impartial."17
By 1832 it had become apparent that Brookville was no longer
the pre-eminent town that it had been. The removal of the land
by and with the consent of the Senate. William C. Linton, Nicholas
McCarty, and Jeremiah Sullivan were the first appointees. The Fund
Commissioners are not to be confused with the 3-member board of
Wabash and Erie Canal Commissioners, created in 182S.
16 Senate Journal, 1830-31, pp. 104-5.
1~ William Wesley Woollen, Biographical and Historical Sketches of
Early Indiana (Indianapolis, 1883), 70.
8 Wallace Papers
office to Indianapolis in 1824 had marked the beginning of its
decline. Benjamin F. Wallace, David's younger brother, had
taken up merchandising in a new town on the Wabash River,
named Covington. The law profession was not as crowded there
as in Brookville, and David decided to join his brother and his
family. The move was made apparently in May, 1832. It would
be interesting to know how the Lieutenant Governor, his wife,
and four small children traveled. It was probably by stagecoach
or carriage, with their household goods following them by wagon.
The journey made a lasting impression on five-year-old Lew, and
he relates in his Autobiography that he and his younger brother
John contracted scarlet fever. The latter died on May 16 in
Indianapolis.18
The country around Covington was described as beautiful, with
small prairies interspersed with wooded areas. But the town itself
must have looked small and barren to the young wife and mother
who was accustomed to the refinements of Brookville. The popu-
lation was about two hundred. The Reverend Edmund O.
Hovey organized a Presbyterian Church in the town in July,
1832, with seventeen members, whom he described "as nothing in
comparison with the large and wicked population of the flourishing
town." The Methodists and New Lights also had churches there.
The Wallaces joined the Methodist congregation.19
The most important point in the village was no doubt the
wharf where Wabash River boats landed weekly, and sometimes
daily, when the river was navigable to that point. Until the
coming of railroads and the Wabash and Erie Canal, the river
was the principal means by which goods were shipped into the
town and the produce of the surrounding area was shipped out.
The David Wallaces apparently boarded for a time but before
long were in a home of their own. In a letter to her mother,
Mrs. Wallace described their house as "not large, but very com-
fortable." David Avas busy adding porches, a smoke house, and
18 Indianapolis Indiana Journal, May 19, 1832.
19 E. O. Hovey Papers, Indiana Division, Indiana State Library;
Mrs. Lew Wallace, "Ancestral Sketch," in Wallace Papers, Indiana His-
torical Society Library.
Introduction
other conveniences. Even though she had found everyone very
kind in the new location, like many another pioneer mother she
was homesick for her family and former friends. It was a con-
solation to her though to be able to report that David was doing
well in his law practice, better than could have been expected.
"I am satisfied he will be much better off than we should have
been if we had stayed in Brookville."20
David's legislative duties required him to be absent from home
during the winter months. From Indianapolis he penned affec-
tionate love letters to his wife, expressing concern for her health
and his longing to be home with her.21 And well he might be
concerned, for Mrs. Wallace had contracted consumption and
died on July 14, 1834 at the age of twenty-eight.22 Four weeks
later, Fanny Wallace, Benjamin's wife, died at the age of twenty-
three, also leaving three small children.23 At the time of his
wife's death, David was in the midst of his second campaign for
lieutenant governor. The boys were placed in the home of a
Mrs. Hawkins, who had a family of girls.24
The Jackson forces in Indiana had continued to gain strength,
and in 1832 their leader received double the vote given to Henry
Clay, the Whig presidential candidate. A year later they were
again in the majority, electing six out of the seven Congressmen
to which the state was now entitled. In 1834, James G. Read was
again the Democratic candidate for governor, with David Culley,
of Dearborn County, his running mate. Noble and Wallace had
been extremely popular officials and were generally regarded as
candidates for re-election before their first terms had expired.
Although the illness and death of his wife left Wallace with little
time or heart for campaigning and speechmaking, when the votes
were counted it was discovered that he had outdistanced his run-
ning mate, Noble, by some 1,200 votes.25
20 Undated letter of Esther Test Wallace to her mother, in Wallace
Papers.
21 See, for example, letter of December 29, 1832, in Wallace Papers.
22 Covington Western Constellation, July 18, 1834.
23 Ibid., August 22, 1834.
24 Mrs. Lew Wallace, "Ancestral Sketch."
25 Indiana Election Returns, 1816-1851 (Indiana Historical Collections,
Vol. 40, Indianapolis, 1960), 145, 167.
10 Wallace Papers
Although the election for Congressmen in 1835 was marked
by a decided lull in party spirit, all the Jackson men were re-
elected and the one Whig was supplanted by a Jackson man. The
following year the Whigs gained the ascendancy and gave their
presidential candidate, William Henry Harrison, a majority over
Martin Van Buren, the Democratic candidate. The election day
fell upon the twenty-fifth anniversary of the Battle of Tippecanoe,
in which Harrison, then governor of Indiana Territory, had led
the militia of Indiana and Kentucky to victory over the Indians
led by The Prophet. It was an auspicious time to repay a debt
of gratitude to their former chief and the people responded with
enthusiasm. Whereas the vote four years earlier was two to
one in favor of Jackson, the 1836 returns were five to four in
favor of Harrison. Wallace had entered into the campaign
enthusiastically, happy to have an opportunity to repay his own
personal debt of gratitude to his former benefactor.26
As noted above, Wallace had been friendly to the Wabash and
Erie Canal project while he was a member of the House of Repre-
sentatives. As lieutenant governor he continued to be friendly to
legislation for internal improvements, including the Mammoth
Bill of 1836 which provided for a network of roads, canals, and
railroads, for the construction of which the Canal Fund Commis-
sioners were authorized to borrow up to ten million dollars.27
26 A celebration held at the Tippecanoe Battleground on November
7, 1835, marked the beginning of Harrison's campaign for the presi-
dency. Wallace delivered an oration at that time, a part of which is
quoted in Woollen, Biographical and Historical Sketches, 73-74.
27 The bill provided for the construction of the following improve-
ments: (1) the Whitewater Canal, together with a canal or railroad
to connect it with the Central Canal; (2) the Central Canal, extending
from some suitable point on the Wabash River, between Fort Wayne
and Logansport, via Muncie and Indianapolis, to Evansville ; (3) exten-
sion of the Wabash and Erie Canal from the mouth of the Tippecanoe
River to Terre Haute, and a crosscut canal to link it with the Central
Canal; (4) a railroad from Madison through Columbus and Indianapolis
to Lafayette; (5) a macadamized turnpike from New Albany to Vin-
cennes ; (6) a railroad or macadamized road from Jeffersonville to
Crawfordsville, via New Albany, Salem, Bedford, Bloomington, and
Greencastle; (7) removal of obstructions in Wabash River; (8) a canal
or railroad from the Wabash and Erie Canal near Fort Wayne via
Introduction 1 1
Wallace participated in celebrations staged at Evansville and
Rob Roy hailing passage of the bill. At the latter place he
reminded his audience that from the time of his first entrance into
public life, he had been an humble advocate of state improvement,
even though at that time it had been hazardous to stand for it.
He pictured the law of 1836 as a magic wand that would work
a marvelous change over the state.
At Brookville, where he celebrated the commencement of the
Whitewater Canal, Wallace prophesied that that place would
regain its former prominence as one of the principal cities of the
state. In tracing the history of internal improvements in the
state, he remarked that, "No dreamer from the land of Utopia
could have imagined in 1831-32 or foretold . . . the passage of
the Mammoth Bill of 1836." "How rapid has been the march
of intelligence and enterprize amongst you!" One of the members
of the New York Stock Exchange was quoted as saying it would
advance the state at least a half century. In Wallace's opinion,
the debt of ten million incurred by the bill was not too great for
the state to bear.28
Supervision of the construction of the projects outlined in the
1836 law was given to a Board of Internal Improvement consist-
ing of the three Wabash and Erie Canal commissioners plus six
additional members to be appointed by the governor with the
consent of the Senate. Construction got under way slowly but
gained momentum as the year drew to a close ; all the activity
created by the various projects lent an air of prosperity to the
state.
Some four million dollars was contracted for this first year. In
his message to the legislature in December, 1836, Governor Noble
warned the lawmakers that this appearance of prosperity did not
have a firm foundation inasmuch as it was based on borrowed
funds. His plea that the people should begin to pay for the
improvements by taxation was answered by an increase in the
Goshen, South Bend, La Porte, to Michigan City. Laivs of Indiana, 1835-
36 (general), pp. 6-21.
28 The speeches are quoted in Covington Western Constellation, March
4, May 20, and October 14, 1836.
12 Wallace Papers
ad valorem tax from 5 to 15 per cent, one third of the proceeds
to be applied toward payment of interest on the loan.29
In the meantime economic conditions throughout the country
and abroad were building up to an ominous climax that was to
have a disastrous effect on the internal improvement program.30
Other states as well as Indiana were contracting enormous debts
for public works; new banks were being chartered, each with
extended credit; the country was importing more than it was
exporting; British creditors who had purchased American bonds
29 Messages and Papers relating to the Administration of Noah Noble,
Governor of Indiana, 1831-1837 (Indiana Historical Collections, Vol. 38,
Indianapolis, 1958), 476-77; Laws of Indiana, 1836-37 (general), p. 112.
30 The first money borrowed by the state for internal improvements
was for construction of the Wabash and Erie Canal. Between 1832 and
1839 bonds were issued and sold for this purpose amounting to $1,727,000.
Principal purchasers were J. D. Beers & Company, New York; Prime,
Ward & King, New York; J. J. Cohen Jr. and Bros., Baltimore; and
the Morris Canal and Banking Company, New York.
Between 1834 and 1836, $1,390,000 was borrowed by the state for
their portion of the capital in the State Bank. This bond issue was all
taken by the Morris Canal and Banking Company.
The internal improvement bill of 1836 authorized the state to borrow
up to $10,000,000 to construct a network of roads, canals, and railroads.
Bonds for about $6,000,000 of this sum had been issued up to August,
1839; the Morris Canal and Banking Company was again the principal
purchaser. By an agreement made with that company in June, 1838, it
was to negotiate the sale of $1,000,000 of sterling bonds in London and
other cities of Europe. The principal, payable in 25 years, and interest
at 5 per cent, were to be payable to M. N. Rothschild & Sons in London.
The fourth and last large bond issue was in 1839 for the purpose
of increasing the capital in the State Bank; $1,500,000 was authorized
but only about $1,000,000 in bonds were issued, all of them going to the
Morris Canal and Banking Company.
With the exception of those sold to J. D. Beers & Company in 1832,
which paid 6 per cent, all the bonds carried an interest rate of 5 per
cent and were redeemable anywhere from 25 to 40 years. The proceeds
from the sale of the land granted by the Federal government to the
state for construction of the Wabash and Erie Canal were expected to
repay most of the money borrowed for that purpose; that borrowed for
the state's investment in the State Bank would be repaid from the profits
realized in the transactions of the bank; the internal improvement loan
was to be repaid by profits realized from operation of the canals, rail-
roads, etc., such as tolls and water rents.
For information on the financing of improvements, see the annual
and special reports of the Fund Commissioners to the General Assembly
Introduction 13
were calling in their loans because of a financial crisis in that
country, thus cutting off prospects for further investments by
citizens of Great Britain. Then in July, 1836, to check land
speculation, President Jackson issued the Specie Circular which
required all payments for public lands to be made in specie. This
tightening of the money market caused the New York banks to
suspend specie payments on May 10, 1837; others followed suit,
and when the news reached Indianapolis, the directors of the State
Bank immediately ordered a suspension even though it meant a
possible forfeiture of the bank charter. After a subsequent investi-
gation of the bank by a legislative committee, the suspension was
approved.
The amount spent on internal improvements in Indiana in 1837
was considerably less than the year before — being only $1,600,000,
but this was sufficient to save the state from "the evils resulting
from the prostration of prices and business in other portions of
the country."31 The close of Noble's administration found the
credit of the state still good, but the pressure in the money market
was causing apprehension as to the future. Had the state under-
taken too much, was the question in the minds of many of her
citizens.
Candidate for Governor
Months before the end of Governor Noble's second term as
governor, it was generally conceded that Lieutenant Governor
Wallace would be a candidate to succeed Noble. The formal
announcement came February 1, 1837, in the Indianapolis Indiana
Journal. The leading Democratic paper immediately accused Gov-
ernor Noble of wanting to perpetuate himself and his Central
Junto in power.32 In their opinion, Col. Thomas H. Blake, of
Terre Haute, was the choice of the Whig party. To emphasize
their disdain for Wallace the next issue of the paper carried the
and the Proceedings of the Fund Commissioners covering the years 1832
through May, 1839, in the Archives Division, Indiana State Library.
31 Messages and Papers of Noah Noble, 583.
32 Indianapolis Indiana Democrat, February S, 1837.
14 Wallace Papers
following announcement with the explanation, "as their deeds are
done in darkness we have enshrouded their appointment in
darkness."
Appointment by Central Junto
for Governor
The Hon. David Wallace
Wallace resigned as lieutenant governor at the close of the legis-
lative session which ended on February 6, 1837.33
The principal issue in the campaign was whether or not to
group the public works that were to be built under the act of
1836 into three classes, giving those in the first class priority.
Wallace was opposed to classification. He felt that "the system"
had been arrived at as the result of mutual compromise — that no
improvements were included that were not absolutely necessary
in order to insure its adoption — and that work on all of them
should proceed simultaneously. In his mind there still was no
danger in a large state debt, even of forty or fifty million dollars,
for if that amount was borrowed, it would be so much added to
the capital of the country and the people would be in a better
position to repay the loan. He did not fear the debt; his only
concern was where the state could borrow the money.
Wallace reasoned that if the works were classified, canals
would be put in the first class, rail and other roads in second or
third class. The postponement of any work would mean its end,
for the friends of a favored work, on its completion, would
become the enemies of all others, and would unite with the anti-
improvement party in crying out against high taxes and in
opposition to further progress. The internal improvement bill
was bringing more people into the state and also increasing the
price that farmers were receiving for their products ; these two
factors, he believed, would enable the people to pay more taxes.34
33 Senate Journal, 1836-37, pp. 550-51. This did not mean any loss
of salary, for the lieutenant governor was paid only for the time he
presided over the Senate.
34 For Wallace's position on internal improvements, see particularly
Introduction 15
Not having a strong candidate of their own, the Democrats
were accused of trying to encourage another Whig to run against
Wallace, on the promise that they would give him their support.
By promoting a division in the Whig ranks, it might be possible
for a Democrat to enter the race at the last moment and win.
Thomas H. Blake, David Hillis, and Amaziah Morgan were
among the Whigs promoted by the Democrats. The first two
declined positively; Morgan apparently flirted with the idea for a
week or two and then declined because of ill health.35 John
Dumont, of Switzerland County, a veteran Whig legislator,
entered the race in May as the leader of the classification forces.36
About the same time, Gamaliel Taylor, a Democrat from Madi-
ison, announced his candidacy.37
In a circular issued by Taylor, he said he was not opposed to
internal improvements, but feared that the present system imposed
a burden beyond the resources of the state to bear and would
result in bankruptcy. If resources were not sufficient, sound dis-
cretion would naturally suggest the expediency of finishing first
those works of the most importance and those that would provide
the greatest revenue. He showed his interest in education by
advocating that the income from the surplus revenue should be
devoted to common schools rather than be used to pay interest on
the internal improvement loan.38 Upon learning that his views
the Indianapolis Indiana Democrat, May 17 and 31, June 7, July 12
and 19, 1837; Indianapolis Indiana Journal, June 3 and July 29, 1837;
and Bloomington Post, May 19, 1837.
35 Indianapolis Indiana Journal, February 18 and April 22, 1837;
Indianapolis Indiana Democrat, February 22, April 19, 1837; Blooming-
ton Post, June 16, 1837. Hillis became the Whig candidate for lieutenant
governor.
36 Richmond Palladium, May 13, 1837.
37 Ibid., April 29, 1837.
38 Rising Sun Times, June 10, 1837; Bloomington Post, June 16, 1837.
An act of Congress of June 23, 1836, provided for the distribution of the
surplus revenue in the Federal treasury, in quarterly installments, to the
several states according to their electoral vote. Dictionary of American
History, edited by James Truslow Adams (5 vols, and index, New York,
1940), 5:143. The Indiana General Assembly, by an act of February 6,
1837, provided that one half of the amount received by Indiana should
be distributed to the counties in proportion to the number of taxable polls,
to be lent to residents, the interest from the loans to be used for the
16 Wallace Papers
were similar to those of Dumont, Taylor withdrew from the
contest.39
Dumont spoke in Indianapolis in June on the necessity of
classifying the public works. He said the Mammoth Internal
Improvement Bill of 1836 was conceived in a committee room;
the works were extended into a great many counties in order that
a sufficient number of legislators would vote for it ; a motion
to print the bill was tabled ; amendments offered were cut off ;
and the gag rule was applied to those who opposed it ; also, lobby-
ists exercised undue influence on the legislators.40 In another
speech at Bloomington he said the system, if carried out as
planned, would plunge the state into bankruptcy and ruin.41
Dumont had been a strong advocate of education and his views
on that subject were in accordance with the views of every friend
of the cause.42 Favorable reports were received from the differ-
ent counties in which Dumont spoke.43
There was some opposition to Wallace because of his age (he
was thirty-eight). However, the state was accustomed to young
governors — Noble was thirty-seven when he took office ; Ray only
thirty. A Delphi writer did not believe he was qualified for the
position. "He is a very genteel, clever little man, very graceful
in his actions, and makes a very pretty speech. But these are not
all the requisites of a good governor. The affairs of the state are
in a very critical condition, and we need a man of experience,
firmness, talents, and integrity. . . ,"44
benefit of public schools. The other half was to be invested in State
Bank stock. Laws of Indiana, 1836-37 (general), pp. 3-14.
39 Richmond Indiana Palladium, July 15, 1837; Indianapolis Indiana
Democrat, July 6, 1837.
40 Indianapolis Indiana Democrat, June 28, 1837.
-n Bloomington Post, July 7, 1837.
42 Indianapolis Indiana Democrat, July 26, 1837, from the Jefferson-
ville Courier.
43 Indianapolis Indiana Democrat, July 19, 1837, quoting the Rich-
mond Jeffersonian, Jeffersonville Courier, Charlestown Indianian, Terre
Haute Western Telegraph, Delphi Oracle; ibid., July 26 and August 2,
1837.
44 Quoted in Indianapolis Indiana Democrat, May 17, 1837, from the
Delphi Oracle, a Democratic paper.
Introduction 17
The Madison Republican and Banner thought he was too
much of a boy. "We want a man possessed of more stability and
weight of character. If ever there was a time when we required
coolness, firmness, energy and talents in our Executive it is now.
Our future prosperity depends greatly upon what is done in the
next three years, and what is to be done depends on the governor.
Mr. Wallace is not the man to guide us in these perilous times."45
An editorial in the Indiana Democrat, complaining of Noble and
his administration, said that Wallace was a politician of the same
stamp as Noble, without half the talent.46
The news that some of the Whigs expected to vote for Dumont
aroused the Bloomington Post to warn that "he [Dumont] is a
wolf in sheep's clothing and is willing to destroy his party for
the sake of his own aggrandizement." If elected he would owe
his success to the Democrats and they, in turn, would expect favors
at his hand.47
Shortly before the election the Indiana Journal, which had sup-
ported Wallace all along, came out with a final blast at classifica-
tionists, saying that those who were opposed to all improvements
were called on to unite with those who deemed the system too
large; by combining their forces they hoped either to prostrate
the whole or to drop a portion of them.48
A final attempt was made to discredit Wallace by the insertion
of the following notice in some of the Democratic papers: "The
Whig candidate, David Wallace, offered and drunk the following
toast at a champagne party at Vevay, on the 20th [July] ultimo,
'The canaille of Indiana. — May they be brought to pay their taxes
with submission and reverence to their superiors,' " with a note
that "canaille" meant lower class. The charge was refuted by
persons who were present at the gathering.49
When the votes were counted, it was found that Wallace had
received 46,067 and Dumont, 36,91 5. 50 The Democratic press
45 Quoted in ibid., April 19, 1837.
46 Ibid.
47 Bloomington Post, June 16 and July 28, 1837.
48 Indianapolis Indiana Journal, July 29, 1837.
^Ibid., August 26, 1837.
50 Indiana Election Returns, 1816-1836, 145-48n. For lieutenant gov-
18 Wallace Papers
attributed Dumont's defeat to the fact that he had entered the
race late and was unable to visit all the counties; also, Wallace
was better known than Dumont.51 It was a hard pill for the
editor of the Indiana Democrat to swallow; a week after the
election he wrote: "Wallace is now governor and we cannot
help it. We regret it very much, as Indiana deserves a much
better one. He is undignified in manner and appearance, puerile
in action, weak in intellect. . . . We can live under his reign
for three years, and then we shall endeavor to defeat him if
possible."52
First Legislative Session
Wallace took over the reins of state government on December
6, 1837. He was no longer a widower, having married Miss
Zerelda Sanders, daughter of Dr. John H. Sanders, of Indianap-
olis, on Christmas Day of 1836.53 Up to this time the Wallaces
had continued to live in Covington, but now it became necessary
to move to the capital city. The Governor's House on the Circle
was still considered unfit for a residence though it was used for
some of the state offices. During the first half of Wallace's term
the family lived in a rented house on South Missouri Street. In
March, 1839, the state purchased the residence of Mrs. Wallace's
father, at the northwest corner of Market and Illinois streets, as a
home for Indiana's governors.54 The Sanders residence continued
to be used as the Executive Mansion down to the time of Gover-
nor Oliver P. Morton.
Noah Noble, in his final message to the General Assembly,
brought the legislators up to date on state problems; Wallace's
ernor, David Hillis received 49,535 votes, Alexander S. Burnett, 22,829.
Ibid., 168-70.
51 Indianapolis Indiana Democrat, August 16, 1837.
52 Ibid., August 23, 1837.
53 Covington W estern Constellation, December 29, 1836.
54 Jacob P. Dunn, Greater Indianapolis. The History, the Industries,
The Institutions, and the People of a City of Homes (2 vols. Chicago,
1910), 1:109. The state offered to buy, for the official residence of later
governors, the house Noah Noble had built at the east edge of the city,
but he apparently declined to sell. See letter of state officials to Noble,
March 6, 1839, in Noah Noble Papers. Indiana State Library.
o
Introduction 19
inaugural address was therefore brief and looked to the future.
The new governor envisioned that it would be his duty to carry
out policies and plans already formulated rather than to initiate
new ones. For those who were fearful that the state had taken
on too much, he painted a rosy picture of the strength and
resources available both for the present and future. Also, he
reiterated the argument used during the campaign against classifica-
tion of the public works; namely, that it would divide the friends
of the system and bring about a complete prostration. He was
in favor of concentrating the means of the state on those portions
of each work that could most readily be finished and put into use.
"Let the people of Indiana be united, let their means and resources
be applied with all their skill and energy, and, I could almost
venture to predict their achieving impossibilities. But sow the
seeds of discord instead . . . and the giant will instantly shrink
into the dwarf, and all their efforts be attended by the mortify-
ing concomitants of failure and disappointment."55 Wallace
promised his aid in the promotion of education and the encourage-
ment of agriculture.
There was a small Whig majority in both branches of the
General Assembly, thus promising fairly smooth sailing for the
new governor. Thomas J. Evans, of Covington, was chosen
speaker of the House.
One of the principal items of business before the General
Assembly was the investigation of the State Bank to determine
whether its charter should be revoked for having suspended specie
payments. Samuel Judah, a former Jackson man but now a Whig,
was chairman of the House judiciary committee which investi-
gated the bank's action and reported favorably on permitting it
to retain its charter. The Senate judiciary committee presented
both a majority and minority report; the former, prepared by
Democrat Andrew Kennedy, censured the bank directors, but the
minority report given by Richard W. Thompson, a Whig, and
favorable to the bank, was adopted.56
55 See below, 62-64.
56 House Journal, 1837-38, pp. 173-76; Senate Journal, 1837-38, pp.
529-49.
20 Wallace Papers
The danger of financial depression was minimized by Samuel
Merrill, president of the State Bank, in his annual report: "There
would appear to be no cause of alarm in the present state of
things. Every prudent man has foreseen its [the depression's]
approach, and while the future was uncertain, his fears may have
predominated. But now the worst is known, and there is no cause
for despair, unless rashness and folly create new and unnecessary
difficulties. The progress of the State in wealth and improvement
need not be long retarded. . . . No failures of consequence
have occurred among the business men. The suits for debt in the
courts are not more numerous than usual. Sheriff's sales seldom
occur. All the produce of the country is demanded for consump-
tion. . . . Emigration to the State is increasing. Canals and rail
roads will soon be completed. Confidence will be restored, and
exchanges be again at fair rates."57
It remained for the Fund Commissioners to present the dark
side of the financial picture, and to give a warning of things to
come. They reported that they had had to purchase specie at a
premium of from 10 to 11 per cent to pay the July interest on
the state bonds; also, that the Cohen Brothers of Baltimore, pur-
chasers of Indiana bonds to the amount of $500,000, had sus-
pended business while still owing the state $300,000. As security
for the debt they were willing to transfer to the state some rail-
road stock, stock in two insurance companies, and deeds to town
lots in New York City and elsewhere, some of which were mort-
gaged or had tax liens against them.58 The General Assembly
granted the commissioners the authority they desired to make a
compromise agreement with the Cohens by accepting the above
security, and also to sell the same if deemed expedient.59 But
even with this dangerous precedent before them, the legislators did
not call a halt to the Fund Commissioners selling bonds on credit.
The Governor and General Assembly, as well as the members
of Congress, continued to press Indiana's claim before officials in
Washington for an additional land grant to extend the Wabash
57 See below, 83-84.
58 See below, 86-88.
7)0 Revised Laivs of Indiana, 1837, p. 356.
Introduction 21
and Erie Canal to Terre Haute. Ten years earlier, when the
question of the original grant was before Congress, Representative
William Hendricks thought it might not be necessary to build the
canal beyond the mouth of the Mississinewa River. Then when
the surveys were made it was extended to the mouth of the
Tippecanoe River in the belief that the Wabash River was navi-
gable to that point ; the land grant was made on that basis. This
decision was soon considered shortsighted, inasmuch as the
Wabash was only navigable to that point seven or eight months
in the year. The Governor and members of Congress put forth
every known argument to show that the original act left it up
to Indiana to decide the point at which the canal should meet
the river, and that the acceptance of the earlier grant did not
preclude its extension. It was not until after Wallace left office
that the additional grant was approved by Congress.60
On the basis of surveys made by different engineers, it was
decided at this session to build macadamized roads instead of rail-
roads between Jeffersonville and Crawfordsville and between
Indianapolis and Lafayette.61
It was time for the appointment by the Governor (with the
advice and consent of the Senate) of Supreme Court judges for
a new seven-year term. The Governor's nomination of the three
incumbents produced no great stir such as occurred in 1831 when
Governor Ray submitted his nominations. Isaac Blackford
had served since the beginning of statehood, and had demon-
strated his unusual ability for the position ; Charles Dewey had
been serving since 1836. There was no opposition to his reappoint-
ment nor to Blackford's. The newest member of the court was
Jeremiah Sullivan, who had been serving under an interim appoint-
ment since the previous March. Twenty senators voted against
him, twenty-five for him, thus giving him the appointment. The
vote was not on party lines so the opposition was evidently a per-
sonal one.62 All three appointees served out their full terms and
60 See below, 144-46, 171-77n, and House Executive Documents, 25
Congress, 3 session, Vol. 3, No. 32.
61 Revised Laws of Indiana, 1837, p. 354.
62 Senate •Journal, 1837-38, pp. 106, 117.
22 Wallace Papers
during their incumbency the court achieved a high reputation
throughout the country.
The appointing and commissioning of county officials was mostly
routine. The only controversial point to arise during Wallace's
first year in office was the election of a successor to James Dill,
clerk of Dearborn County, whose death had occurred August 10,
1838. His son, Alexander H. Dill, had been performing the
duties of the office for his father, and the court appointed him
clerk pro tern. One faction in the county wanted an election at
once to choose a successor to Dill ; the other wanted the son
continued in office until the general election the following August.
A number of letters and petitions were sent to the Governor on
the subject. Wallace chose to issue a writ for a new election
at once.63
Removal of the Indians
A major problem confronting the Governor during his first
year in office was the avoidance of a clash between the Indians
and whites over lands ceded by the Potawatomi to the Federal
government and pre-empted by the whites. Upon being apprised
of the situation by Indian Agent Abel C. Pepper, the Governor
made a visit to the danger spot and conferred with the agent,
with John Tipton, former agent and now United States senator,
and others. The Indians had promised to move west of the
Mississippi, but now that the time had arrived, they were in no
hurry to leave. Tipton had been writing to various correspondents
that "the Indians must go." He apparently was eager and willing
to organize a military company and force the Indians to move.
Therefore when the Governor and Tipton met, it only remained
for them to go through a formal exchange of letters so that all
would know that the Senator had the authority to act. Tipton
moved swiftly to put an end to the vacillating behavior of the
Indians, and within ten days some eight hundred Potawatomi were
on their way west. He kept the Governor informed of the
progress of the emigration party during the time he remained
63 See above, 146-47n.
Introduction 23
with it. On September 16, at Danville, Illinois, the Indians were
turned over to William Police who was in charge for the
remainder of the journey. To many persons today the methods
used in forcing the emigration of the Indians seem unnecessarily
harsh. The danger of a clash between the Indians and white
settlers was probably exaggerated. The final credit (or the
discredit) for the swift removal should not be given to the Gov-
ernor, but rather to the agents of the Indian Department and to
Tipton. Wallace merely approved their plans.04
Second Legislative Session
As Wallace prepared his message to the legislature at the close
of his first year in office, he decided to take an optimistic view
of the future even though the storm clouds of economic disaster
were coming ever closer. While acknowledging that the state
had its hands full, yea "full to overflowing," he maintained that
if all the energies and resources of the state were concentrated
on the task at hand, it would weather the storm. The Gov-
ernor then proceeded to "prove" his premise by listing the avail-
able resources and then setting over against them the liabilities of
the state.05
It is not always easy to follow Wallace's manipulation of
figures. He attempted to show that instead of a deficit of some
$47,000, the state would have had a surplus of $37,000 in 1838 if
all her income had been properly invested, e.g., in bank stock at
10 per cent interest. That part of the surplus revenue which
had been allocated to the counties for purposes of education should
be going toward payment of interest on internal improvement
loans, in his opinion. Education could wait a few years; improve-
ments could not.66
64 The correspondence between Governor Wallace and Tipton as well
as other letters and documents regarding the emigration are printed in
the Senate Journal, 1837-38, pp. 718 ff. They were reprinted in the John
Tipton Papers, 3 :675 ff. See also The Trail of Death. Letters of Benja-
min Marie Petit, by Irving McKee (Indiana Historical Society Publi-
cations, Vol. 14, No. 1, Indianapolis, 1941).
65 See below, 154-60.
66 See below, 156-57n.
24 Wallace Papers
For the assets of the coming year, the Governor listed the
surplus revenue (including the fourth installment, which was
never paid) ; $900,000 from the sale of canal lands (90,000 acres
at an estimated $10 per acre), and $1,767,744 that the state
hoped to realize from the additional lands to be granted for the
extension of the Wabash and Erie Canal to Terre Haute (this
grant was not even made by Congress until 1841), plus other
items, making a grand total of $4,383,623. Did this look like
bankruptcy, he asked the legislators? If this sum were properly
invested, either in bank stock or in loans upon mortgages (at 8
per cent interest), it would yield a revenue of $320,000. By 1842
he estimated that the value of the taxable property in the state
would reach 170 million dollars; this plus 100,000 polls, at the
current rate of taxation, would produce around $300,000.
Whether or not the above revenue could be realized would depend
upon the action of the legislature.07
The Governor was optimistic that the state would soon be
receiving some revenue from tolls and water rents on the public
works. By the spring of 1839 he estimated that 90 miles of the
Wabash and Erie Canal would be ready for boats, with another
55 miles under contract; on the Whitewater Canal, 31 miles
would be completed with 24 under contract ; on the Central
Canal, 43 miles would be completed and the same amount under
contract; on the Madison and Indianapolis Railroad 22 miles
would be completed, four under contract ; on the New Albany
and Vincennes Road, 41 miles would be completed, 26 under con-
tract. No work had yet been completed on the Cross Cut and
Erie and Michigan canals, nor on the Indianapolis to Lafayette
and Jeffersonville to Crawfordsville roads, but a portion of each
was under contract.68
Wallace still opposed classification of the public works. How-
ever, he acknowledged that his plan of concentrating on those
portions of each work that were likely to be the most profitable
had not been carried out ; instead, contracts were still being let on
portions remote from each other. To further his plan, he proposed
67 See below, 159-60.
68 See below, 161-62.
Introduction 25
reducing the number of members of the Board of Internal Im-
provement from nine to three, and reducing the corps of engi-
neers to one for each work. The reduction in the number of
board members would effect a saving in salaries, and by doing
away with the representative principle (i.e., each commissioner
looking after the interests of his own particular section of the
state), it was hoped the members would act for the good of the
entire state.69
This recommendation was embodied in a general measure call-
ing for modification of the internal improvement system. There
was considerable debate on whether the number of board members
should be three or five, but the smaller number was accepted in
the end. The act also provided that the board could not expend
more than $1,500,000 in 1839, and not more than $1,000,000 in
subsequent years. Construction was to be concentrated on those
works and parts of works likely to be most advantageous, but
none of the works provided for in the original bill were to be
dropped.70
Regarding the Michigan Road, which was not a part of the
internal improvement system, the Governor advocated making it
a macadamized road, or if that could not be done, the legislature
should appropriate money to repair it.71 As in the previous session,
the friends of the road made a valiant effort to obtain an appro-
priation for its upkeep but "the system" took precedence and their
efforts failed.
Another important measure that was to come before the legisla-
ture concerned an increase in the capital invested in the State
Bank. The Governor favored a gradual increase and warned
against the danger of the state being flooded with depreciated paper
currency if there was too rapid an expansion. The members were
practically all in favor of an increase in state bank capital ; only
the amount was debatable.72 The measure which passed called
69 See the letter of Jesse L. Williams to James B. Johnson, one of the
Canal Commissioners, July 5, 1838, printed below. Williams made this
same suggestion in his letter.
1° Lazes of Indiana, 1838-39 (general), pp. 3-8.
71 See below, 165.
72 See below, 166-68n.
26 Wallace Papers
for an increase of $1,500,000 in state stock in 1839, and $700,000
a year for the next five years, or a total of $5,000,000. It was
believed the money could be borrowed outside the state at an
interest rate of 5 or 6 per cent, and then lent through the bank
to individuals or firms at a rate of 8 or even 10 per cent. Thus
the revenue from the state's investment in bank capital was
expected to reach about $50,000 in 1840, and would increase
gradually thereafter. The whole of this income was pledged to
the payment of interest on the bank and internal improvement
loans.73
In one other recommendation regarding the State Bank, the
Governor showed himself in favor of reducing the power of the
executive branch of the government. Whereas the act creating the
bank provided that if the governor had reason to believe the bank
had violated its charter, he could order a scire facias calling on
the corporation to show cause why its charter should not be
revoked, Wallace believed this power should belong to the General
Assembly. "The Bank, I hold, belongs to the people; was
expressly created for their convenience and benefit; and should on
that account be so conducted as to attain these ends. It ought
therefore to be held responsible to them. . . ."74 He no doubt was
looking ahead to the time when a governor might be elected who
would be unfriendly to the bank and could make trouble for it.
Wallace gave considerable space in his message to a reiteration
of Indiana's claim to an additional land grant to aid in extending
the Wabash and Erie Canal to Terre Haute.75 This was to be a
recurring theme until a favorable decision was given in 1841.
Another very important matter before the General Assembly
was the revision of the tax law. The Governor, along with other
state officials, was disappointed in the amount of state revenue that
was coming in from taxation. Since the amount of land subject
to taxation was increasing each year, and since the population,
number of town lots, and corporation stock was also increasing,
it was natural to expect that the amount of revenue would show
73 Laws of Indiana, 1838-39 (general), pp. 15-17.
74 See below, 169-71. There was no legislation on the subject.
75 See below, 171-77.
Introduction 27
an appreciable increase. Instead, the 1838 revenue from some
sources was less than that of the year before. To the Governor
this proved that the mode of collecting and assessing the taxes
was "wretchedly defective." The General Assembly passed an
act aimed at correcting these defects,76 and offered remedies to
increase the revenue such as raising the levy on taxable property,
increasing the poll tax, repealing the provisions for using the
money from the sale of forfeited lands for school purposes and for
exempting Indian reserves, canal and school lands from taxation,
repealing the provision giving the proceeds of the first and
second installments of the surplus revenue to schools, and levying
a tax on professional persons. Senator Robert Dale Owen pro-
posed that the levy on taxable property should vary from 20 to
50 cents on each $100 valuation according to how close the land
was located to one of the lines of public works, and that lots in
towns located at the termination of any public work should be
taxed at $1.00. As finally passed the revenue bill doubled the levy
on taxable property from 15 to 30 cents on each $100 valuation.
The poll tax remained at 50 cents, but all exemptions were
wiped out. Canal and school lands and Indian reserves were to
be taxed the same as other lands. The taxing of canal lands on
which payments were still being made aroused the ire of some of
the legislators from the northern part of the state, and their pro-
test was made a matter of record.77
On the subject of education, Governor Wallace commended
the Wayne County teachers for joining together to promote their
profession. A communication that he had received concerning
making provision for the education of the deaf and dumb was
referred to the legislature with the recommendation that "a nobler,
a purer, a brighter act of genuine benevolence" could not be
enacted. 7S Before making any such provision, the legislature
70 See below, 177-79n.
77 See the reports of a select committee of the House and of the ways
and means committee, January 1+ and 24, 1839, printed below; Indian-
apolis Indiana Journal, February IS, 1839; Laics of Indiana, 1838-39
(general), pp. 19-28.
78 See below, 183-84.
28 Wallace Papers
decided to find out how many deaf and dumb children there were
in the state.79
At the annual state education convention which met the first
of January, 1839, Governor Wallace was chosen to preside. One
of the recommendations that came out of the convention was for
the appointment of a state superintendent of common schools. The
bill that was introduced, reorganizing the common school system,
provided for such an appointment ; it passed the House on the
next to the last day of the session, leaving no time for Senate
action.80
As might be expected of a graduate of West Point, the Governor
made a strong recommendation that the legislature do something
to improve the state's militia system.81 He also reminded the
legislators of the provision in the Constitution that made it their
duty to encourage intellectual, scientific, and agricultural im-
provements. It was not enough, he said, for the state to build
railroads, roads, and canals to provide a market for the state's
products ; it should go further and encourage the cultivation of
new products such as sugar beets, the introduction of improved
breeds of hogs and cattle, and the production of salt and iron
ore.82 Several bills were introduced that embodied these recom-
mendations, but none became law.
The General Assembly adjourned on February 16. Senator
John Vawter, in commenting on the session, said the "modifying"
group (those in favor of modifying the internal improvement
program) had been in the ascendancy, but divided like "system"
men on the details of any bill. "At last both parties were forced
to compromise many of their favorite notions." It was hoped that
the new Internal Improvement Board would be satisfactory to
both groups.83
79 Lazis of Indiana, 1838-39 (general), pp. 58-59.
SO House Journal, 1838-39, pp. 621-22.
81 See below, 185-86.
82 See below, 190-92.
83 Indianapolis Indiana Journal, February 15, 1839.
Introduction 29
Internal Improvement Program Slowed
When the new board held its first meeting the last of March,
the Indianapolis Indiana Journal reported that the members felt
somewhat embarrassed by the conflicting requirements laid down
in the law. For example, the total expenditures for the year were
limited to $1,500,000, to be concentrated on works that could be
completed sufficiently to yield an income, yet there were contracts
already outstanding that would amount to $3,414,000. The board
was given the power to transfer contracts from one public work
to another only if the contractor acquiesced. At the next meeting,
in June, the board reported that they had been able to transfer
contracts on the southern division of the Central Canal to the
northern division and from the Cross-Cut Canal to the Wabash
and Erie.84
The Board of Fund Commissioners, charged with obtaining
funds for the public works, had likewise been reduced in number
by the legislature from three to two members. The Governor
apparently wished to retain one member of the old board and
renominated James Farrington, but he declined to serve.85 Thus
two new Fund Commissioners, Milton Stapp and Lucius H. Scott,
took over the job of trying to borrow money in a market that
was getting tighter and tighter.
The task of borrowing a million and a half dollars for addi-
tional capital in the State Bank was given to Samuel Merrill,
president of the bank, instead of to the Fund Commissioners. He
was inexperienced in such negotiations and was forced to rely on
the advice of former and present Fund Commissioners. By plac-
ing the greater part of the loan with the Morris Canal and
Banking Company, the same banking company that held most of
the state's internal improvement loans, the state was in double
jeopardy when that firm suspended operations in August.86
84 Indianapolis Indiana Journal, March 23 and June 22, 1839; report
of Board of Internal Improvement, December, 1S39, below, 355-75.
85 Indianapolis Indiana Journal, February 15, March 23, and April
20, 1839. The two members of the old board whose services were termi-
nated were Caleb B. Smith and Isaac Coe.
8(5 See Merrill's report on his mission, January 8, 18+0, printed below.
30 Wallace Papers
The election for representatives in Congress and members of
the General Assembly was held on August 5, 1839, and resulted
in an upset for the Whigs. Five out of seven of the newly
elected Congressmen were Democrats, whereas there had been six
Whigs and one Democrat from Indiana in the previous Con-
gress.87 In the General Assembly, the Democrats would be in the
majority in the House, while the Whigs retained a small lead
in the Senate. The Indianapolis Indiana Journal blamed the
Whig defeat on a lack of unity and a lack of work, but prophesied
that it would have a good effect on the party. One thing that
kept them divided, according to the Journal, was the fear of who
would be the party nominee for President in 1840. 8S
Word was received on August 10 that the Morris Canal and
Banking Company, holders of over $2,000,000 of the internal
improvement bonds as well as $1,000,000 in bank bonds, had
failed. A week later, Noah Noble, president of the Internal
Improvement Board, informed the contractors on the public
works that it was likely that no funds would be available to pay
them.89 The news brought widespread dismay; some refused to
believe it, other looked around for some way out of the dilemma.
On some of the works only a little remained to be done before
87 Indiana Election Returns, 1816-1851, 97-100.
88 Indianapolis Indiana Journal, August 17, 1839. Henry Clay, on
learning of the Whig defeat in Indiana, wrote from his home in Ken-
tucky, "Was the result of your late elections owing to the use of my
name in connexion with the Presidential office?" Senator O. H. Smith,
the recipient of the letter, was frank in his reply: "The late elections
in this State are little understood abroad, they did not turn mainly upon
general politics. Our system of internal improvements, and the conse-
quent high taxes, with which the Whig cause is unfortunately identified
to a great extent, although both parties have been instrumental in bring-
ing the system upon us, has had a controlling influence and it may con-
tinue for years." He then went on to say that in a contest between Clay
and Van Buren in Indiana, "it will require desperate exertions to insure
our success." In reply to Clay's question whether there was someone
else that could do better, Smith answered, "I have no doubt but that
General Harrison could get a majority of this State against Mr. Van
Buren." O. H. Smith, Early Indiana Trials and Sketches (Cincinnati,
1858), 251-53.
S9 See Milton Stapp to Noble, August 6, 1839, below; Calvin Fletcher
Diary, August 10, 1839, in Indiana Historical Society Library; Noble's
Circular, August 18, 1839, below.
Introduction 31
they could be placed in use. To abandon them would mean a
deterioration and probable loss of all that had been accomplished.
In some cases contractors attempted to go ahead with local funds.
September and October brought little improvement in the
financial picture. The Fund Commissioners were able to collect
a small amount of money now and then which they hastily sent
on to Indiana, with the hope that it would be sufficient to place
the works in such condition that they could be protected from
injury until construction could be resumed. Businessmen
in various communities considered the possibility of carrying
on the improvements by private enterprise, but where could they
borrow the money? State bonds were sold to a group in Madison
for the purpose of raising money to go ahead with the Madison
and Indianapolis Railroad.00 In October a letter was received
from the Rothschilds in London in which they threatened to sell
Indiana bonds at public auction for whatever they would bring
if the state did not meet the interest payments on Indiana bonds
held by English investors.91
90 See below, 274--75n.
91 See below, 271-73. A correspondent of the Lafayette Eagle gave
the following explanation of the Rothschild letter: "It seems that the
Commissioners of Indiana, who managed her finances under the title of
Fund Commissioners, sold to the Morris Canal Bank certain sterling
bonds, with the interest payable in London; that a part of these bonds
were in the hands of the Rothschilds, and had been sold to them by the
Morris Canal Bank. In July last, the interest on the bonds in the hands
of Rothschilds, amounting to near $47,000, became due and payable in
London, and that the Morris Canal Bank, instead of sending the cash
to London to pay said quarterly instalment of interest, sent a further
amount of Indiana bonds, say $60,000, to be sold to pay the interest
aforesaid. The Rothschilds complain of this kind of payment, and say
that for the credit of the State, they paid the cash on the interest before
mentioned, and objected to the course pursued by the bank in offering
such payment in bonds.
"The Rothschilds further inform the Treasurer . . . that they hold
$75,000 in bonds of the State of Indiana, upon which the Morris Canal
Bank has hypothecated and received $500,000, and that said bank has
failed to redeem, and that unless the Morris Canal Bank does honorably
discharge her interest in London, as it may accrue, and comply with her
contracts there, they, the Rothschilds, will be compelled to sell the said
$75,000 of bonds and apply the proceeds thereof at what they may be
sold, to the liquidation of said liabilities, however ruinous it mav be
32 Wallace Papers
In the midst of the worry over financial matters, Governor
Wallace issued a Thanksgiving Day Proclamation in which he
reminded the people that in the midst of their troubles they
still had much for which to be thankful : peace, civil and religious
liberty, health, a good harvest, improvement of education, etc.92
The Rothschild letter was a warning that something must be
done toward payment of the interest ($210,000) on the internal
improvement and Wabash and Erie Canal bonds that would be
due January 1, 1840. The revenue from taxes would not be avail-
able in time to make the payment. Heretofore the interest pay-
ments had been made out of the borrowed capital, but now that
resource was closed. Revenue from the new tax law passed at
the previous session of the legislature would not be available
until April. The only source of relief seemed to be the State
Bank. The Fund Commissioners addressed a letter to the directors
on November 12 asking to borrow the interest money in specie,
promising to repay it from the tax money as soon as that became
available. The Governor, Treasurer of State, and Auditor rec-
ommended that the request be granted in order that the credit
of the state might be maintained. The directors agreed and the
word went out to all of the branches to gather up their available
specie and forward it to Indianapolis. By early December all was
ready ; the money was loaded into wagons and sent overland to
New York, the winter being too far advanced to permit use of
the Ohio River to Pittsburgh.9" The state and local bank officials
no doubt tried to keep the transaction quiet but how successful
they were is not known. Certainly the legislators would have to
be told when they gathered in December for their annual session.
Last Year in Office
It will be recalled that the Governor for the first time was
faced with a divided legislature, the House having a Democratic
majority, the Senate a slight Whig majority. On joint ballot
to the credit of the state and injurious to her interests.'' Quoted in Terre
Haute W abash Enquirer, November IS, 1839.
92 See below, 303-5.
93 See below, 306-8n.
Introduction 33
the Democrats were ahead. James G. Read, Democrat, was
chosen as Speaker of the House. With a legislative body so con-
stituted there was bound to be criticism and investigation of the
conduct of Whig officials who had so handled affairs in the thirties
as to bring the state to the brink of financial disaster. During
the course of the session, the House called for no less than
seventeen formal reports by the internal improvement officials
alone, while the Senate called for eighteen. Bewildering as
they are to the reader today, they were probably as much so to
the majority of the legislators. Through a long session of eighty-
five days the members of the two parties wrangled while their
constituents waited patiently for the relief that was so much
needed.
State officials sought to give as favorable a picture as possible
of the financial condition of the state, but did not succeed very
well. The Treasurer was able to report that the revenue from
taxes was coming in satisfactorily, thus easing the apprehension
that had been expressed on that account. He expected the state
would be able to meet the current expenses of government in 1840
with the revenue from the poll tax plus the balance in the treas-
ury and amount out on loan, but warned that additional funds
beyond the poll tax would be needed the following year. The
thirty-cent tax levied on each $100 of taxable property, most of
which was to be used in payment of interest on the state bonds,
would have to be continued or revised by the present General
Assembly as the levy had been made for only the one year.94
The Fund Commissioners, in laying before the Assembly a
report of the bonds sold, regretted that they could not present
a very cheery prospect. "The large amount of state stocks thrown
suddenly into market for internal improvement and banking pur-
poses, connected with the embarrassed condition of the commercial
affairs of the country, and the contraction of moneyed facilities
usually afforded by the Bank of England, all conduce to the
depression of the prices usually obtained for state securities."
Although the integrity of the institutions indebted to the state was
94 See the report of the Treasurer of State, November 1, 1S39, below.
34 Wallace Papers
considered unimpeachable, yet if the means they possessed should
be exhausted in trying to maintain their credit in the present com-
mercial embarrassment, it might be a long time before the state
could collect the amount due them, and it might not be possible
to collect at all.95
The report of Mr. Merrill, president of the State Bank, was
equally depressing. It had not been possible to increase either
the stock in the bank or open the three new branches authorized
by the last General Assembly. Some of the branches which had
lent heavily to the state would have to limit their operations and
they might possibly be forced to suspend specie payments. Many
banks in the East and some in the West had suspended specie
payments during the fall months. The board of directors of the
Indiana State Bank, at their meeting in November, had left it up
to the officers of each branch to determine whether or not to
suspend. In some cases, the banks refused to lend to outsiders but
agreed to accommodate their own neighbors if the money was to
be used for a legitimate purpose.
In Merrill's opinion, the bank was responsible only in a minor
way for the existing financial embarrassment. That institution
had always favored the raising and exportation of produce, and
he felt that if the labor of the country had been directed more
to those objects and less to the development of towns and con-
struction of public works, the present difficulties would have been
measurably avoided. Rather than drop the improvements that
had been started, and thus lose the money invested in them, he
thought they should be completed by those individuals most likely
to profit from them. "The state is interested in increasing its
wealth, and the individuals who should be called upon have a
double interest, one the increased value of their property and the
other to prevent its depreciation and the loss of debts, which must
be inevitable if opportunities for employment be not provided,
and general discouragement and stagnation prevail. Let citizens
show the right spirit, let the state be faithful to itself, and its bank
capital may be enlarged, its business prospered, its revenues aided,
95 The report of the Fund Commissioners is printed below, 2S8-301.
Introduction 35
its wealth and respectability vastly increased, wide spread ruin
may be avoided and we again become a united, energetic, and
prosperous people."90
The above reports were apparently in the hands of the legis-
lators before the Governor delivered his message on December 3.
Wallace could now look back upon two years of his administration
with only one more year of his term to serve. Looking ahead to
the nomination and election of a governor in 1840, he apparently
decided to take a more pronounced political stand than he had
heretofore done in his messages. Before he had gotten beyond the
first paragraph he had aroused the ire of the Democratic members
by placing the principal blame for the financial straits in which
the country found itself upon the Democratic administration in
Washington.97 The passage of the gold bill had occasioned an
unnatural importation of specie, not in the usual way of trade,
and the decrease in tariff rates had led to an increase in imports
and a consequent injury of home manufacturers. As a third con-
tributing cause he admitted that there should have been more
industry and economy on the part of Indiana residents and less
speculation in lands and town lots. There was no admission that
the internal improvement program had been too large or that
there had been any mismanagement on the part of state officials.
After having placed the blame for the depression where he
thought it belonged, the Governor immediately turned his atten-
tion to state finances. Early tax returns showed that in spite of
the new revenue law some of the property owners were still evad-
ing the payment of any taxes, and judging from the votes cast in
the last election some of the men were not paying the poll tax.98
After his review of the state debt and the means to meet it, the
legislators should have been convinced that the state needed to
collect every bit of revenue that it could.
As everyone well knew, the failure to procure funds from the
sale of bonds effected early in the year had not only deprived the
state of money to meet the January interest payment on its bonds
96 Merrill's report is printed below, 310-20.
97 See below, 323, 376-81, 393-99.
98 See below, 323-28.
36 Wallace Papers
but had also left the state in debt to contractors and laborers for
work performed on the public works. One of the most important,
if not the most important, question before the legislature was
how to meet this debt. The Governor was confident that sufficient
funds could be collected on the bonds sold in New York if the
contractors could wait a reasonable length of time. But realizing
that was too much to expect, he thought it would probably be
necessary to issue state scrip which could later be redeemed by the
Fund Commissioners as soon as sufficient funds were available.
Greatly as he was opposed to such a measure, it was better to do
that than to see the character of the state jeopardized and a
respectable and deserving portion of her citizens ruined. "But
let it be a last resort — when every other rational expedient has
failed."99
Though work on the various lines of improvement had been
suspended for the most part, the Governor was not willing to
abandon completely the internal improvement program. In his
opinion the state should first provide against the dilapidation of
the works left in an unfinished state, and then, as means could be
procured, finish some completely and others to points where
they would be useful.1
Concerning Indiana's claim to an additional land grant to aid
in extending the Wabash and Erie Canal to Terre Haute, the
Governor was forced to report that little progress had been
made. A joint resolution asked Indiana's senators and Congress-
men to continue their efforts to effect a favorable decision.2
The increase in the state's population was bringing with it an
increased need for a system of common schools. The Governor
99 See below, 330-31.
i The Democrats in the House introduced a bill to modify the internal
improvement system, but it was voted down in the Senate. House
Journal, 1839-40, pp. 413, 700; Senate Journal, 1839-40, p. 331. The pro-
visions of the bill are not known. An attempt on the part of the
Democrats to add an amendment to the bill for the relief of contractors
providing for the suspension of all contracts and further loans for in-
ternal improvements, except those on the Wabash and Erie Canal, like-
wise failed. Indianapolis Indiana Democrat, January 24, 1840.
2 Laws of Indiana, 1839-40 (local), p. 244.
Introduction 37
recommended creation of a board of public instruction, whose duty
it would be to superintend the establishment of schools in every
county, to see that funds were carefully husbanded and equitably
distributed, to provide for competent teachers, and to awaken the
people to the need for schools. To remedy the scarcity of compe-
tent teachers, the Governor proposed that a separate department
be created at Indiana University for the training of teachers.3 The
Governor's recommendations went unheeded and no general legis-
lation was enacted regarding schools. The census returns for 1840
showed that Indiana ranked sixteenth among the twenty-six states
in its proportion of literate adults.
Regarding the state prison, the Governor felt that legislation
was needed to make it what it ought to be, "a place both of pun-
ishment and reformation." Inasmuch as no religious instruction
was being given to convicts, the Governor recommended appoint-
ment of a chaplain. The House committee on affairs of the prison
reported it was badly managed. They apparently felt that the
method of leasing out the prison to the highest bidder was the root
of the trouble and recommended that this be discontinued.4 The
legislature failed to make any change in the administration of
the prison at this session.
Petitions and memorials regarding construction and upkeep
of the Cumberland Road, the harbor at Michigan City, and
removal of the obstructions in the Wabash River were passed on
to the legislature with little comment from the Governor other
than that the improvements were needed.
In addition to the recommendations of the Governor, the legis-
lature had those of the Internal Improvement Board. Noah
Noble, president, and the other members of the board acknowl-
edged that the state had divided her resources and energies among
too great a number of improvements, and that it would have been
better to have completed some before proceeding with others.
This was a tacit acknowledgment that those who had favored clas-
sification of the public works had been right after all. The board
was hopeful that the European market would soon take an upward
3 See below, 345-46.
4 See below, 346-47n, and House Journal, 1839-40, pp. 833-34.
38 Wallace Papers
turn so that surplus capital would again be available for the pur-
chase of American bonds ; also, that at least one of the public
works could be taken up in the spring and brought to completion.
To obtain money for the payment of interest on the Wabash and
Erie Canal bonds, the board advocated selling the remainder of
the canal lands which had come into their possession through a
treaty with the Indians, and also to allocate the payments being
received on canal lands for the same purpose.
Also, the board thought that citizens should be encouraged to
form private associations to carry on the improvements, financed
by the sale of state bonds rather than stock of their own.5 It was
not until two years later that legislation was enacted to permit
the transfer of the public works to private companies.
Amos Lane, a long-time foe of Noah Noble, had been elected
as one of Dearborn County's representatives. He had hoped to
be elected speaker of the House, but failing to secure that post,
he was made chairman of the important committee on canals
and internal improvements. In a lengthy report he blamed former
Governor Noble for passage of the internal improvement bill of
1836 from which all the state's difficulties stemmed.
Recommendations accompanying the report called for ( 1 ) the
prosecution of two works in addition to the Wabash and Erie
Canal, provided the next General Assembly should deem it expedi-
ent and the necessary funds could be obtained, preference to be
given to those works that would provide the most revenue; (2)
the reductions of the boards of Internal Improvement and Fund
Commissioners to one member each to be elected by joint ballot
of the two houses of the Assembly.6
Attempts to remove Noble from the Internal Improvement
Board failed. Likewise, attempts to remove Samuel Merrill from
the presidency of the State Bank and Calvin Fletcher and Robert
Morrison from the board of directors of the bank were thwarted.7
5 The report of the board is printed below, 355-75.
6 House Journal, 1839-40, pp. 721-38; Indianapolis Indiana Democrat,
February 18, 1840.
1 House Journal, 1839-40, pp. 804-7; Terre Haute Wabash Enquirer,
February 19, 1840.
Introduction 39
Passage of a revenue bill and one for the relief of contractors
were the most important measures to be considered by the Gen-
eral Assembly. The Democrats were well organized, working
through secret caucuses to prepare their legislation and plan their
course of action. The Whigs were suspicious of what they might
try to do and therefore scrutinized every bill carefully to be
certain it did not contain some unexpected clause placed there
for political capital.8
The revenue bill (providing for a 40-cent levy on property and
$1.00 on polls) was not reported to the House from the ways and
means committee until February 1 1 ; then its consideration was
postponed still another week by the Democrats. The Whigs in
the Senate had been pushing for an early adjournment, but had
to keep extending the time. February 24 was finally agreed upon.
When the revenue bill came up for discussion on the floor of the
House, the property levy was reduced to 30 cents and the poll tax-
set at 50 cents. A minor change was made in the bill by the
Senate; while the House was considering this Senate amendment
one of the Democratic members moved to amend the bill further by
adding to it the provisions of another bill that had already been
tabled, calling for the reorganization of the boards of Internal
Improvement, engineers, and Fund Commissioners. The revenue
bill passed the House in this form but the Whigs in the Senate
refused to accept the amendment (because it called for the ap-
pointment of Nathaniel West as Fund Commissioner) and the
bill was lost. At the last moment, when it became apparent that
the Assembly would adjourn without making any provision for
future taxes, Amos Lane introduced a joint resolution reviving the
revenue law of 1836-37; this passed both houses under suspension
of the rules. It provided for a poll tax of 50 cents, but the prop-
8 For example, one representative wrote that a bill for the relief of
contractors was in fact a bill to send Nathaniel West to New York as a
political missionary, for the purpose of increasing the political stock
of the party in Indiana. L. G. Thompson to Allen Hamilton, December
15, 1839, in Allen Hamilton Papers, Indiana State Library.
40 Wallace Papers
erty tax was only 15 cents on each $100 of taxable property, one
half the levy of 1839.9
The fate of the bill for the reorganization of the boards of
Internal Improvement and Fund Commissioners seems still more
strange. On Monday, the last day of the session, the bill was
taken up by the Democrats in the House, a Senate amendment
was accepted without being read, the bill was passed, and sent to
the Governor for his approval. Efforts to find the bill on the
previous Saturday had proved unavailing, so now when it was
suddenly taken up and passed by a yea and nay vote, the Whigs
of the House were suspicious that the Senate amendment had
been altered in some way. But this time they were wrong; Noble
was retained as the sole member of the Board of Internal Improve-
ment with Jesse L. Williams, engineer, serving as ex officio mem-
ber. Milton Stapp was to continue as Fund Commissioner with
the Treasurer of State serving as ex officio member.10 The Demo-
crats bragged that they had saved the state thousands of dollars
by cutting off a bevy of engineers and reducing expenses from
$61,600 to $2,300, but Jesse L. Williams denied this, saying the
engineers had been dismissed as of the completion of the
duties required of them in estimating damages sustained by the
contractors by reason of the suspension.11
Bills for the relief of contractors were introduced in both houses
by members of both parties. Their provisions are not known but
in general the Whigs wanted the banks to issue the scrip instead
of the treasurer of state. No one was anxious for the state to
issue paper money or scrip, but it seemed to be the only alterna-
tive. Representative Lewis G. Thompson wrote home that "the
only plausible means of relief will be in scrip — or the issue of
1,000,000$ in one two fcf three dollar notes — our Banks could
no doubt sustain a much larger circulation in small notes than
they can in large ones. This would be with me like taking
» See below, 328n-29n.
10 See note, 329n.
11 Indianapolis Indiana Democrat, February 25, 1840; Indianapolis
Indiana Journal, April 23, 18+0.
Introduction 41
medicine — and would be a desperate remedy in a desperate
disease."12
The bill that passed provided for issuance of treasury notes
in denominations of $5.00 and $50 by the treasurer of state
to pay the contractors for work performed and for damages
suffered in the suspension of work. The Governor did not sign
it, but allowed it to become law without his signature. One of
the arguments presented against the bill was that it would be
a violation of the Federal constitution which prohibited states
issuing bills of credit. Another argument was that by accepting
the treasury notes for taxes the state would be deprived of revenue
with which to pay the interest on the public debt, and if this was
not paid, the credit of the state would be ruined, and in the end
all would suffer.13
Execution of the law presented many problems to the Internal
Improvement Board which was given the task of paying damages
suffered by contractors. Noble referred to it as the "law of abomi-
nations." Judah called it "a mass of Loco foco stupidity."14
After a lengthy session of eighty-five days the legislature ad-
journed. It was no doubt a relief to both the legislators and the
people. The comment of the Indiana Journal was: "May Heaven,
through all time to come, deliver the state from such another
[session]."15
12 Thompson to Allen Hamilton, December 15, 1839, in Allen Hamil-
ton Papers, Indiana State Library. Jesse L. Williams, engineer for the
public works, expressed himself in similar fashion: "I feel very much
for the embarrassment of the contractors. How they are to be paid
very soon unless they can take state bonds, I cannot conceive. The issue
of scrip or treasury notes without any thing to base it upon, and without
any immediate prospect of a loan to redeem it I fear would not do.
What other plan can be proposed? . . ." Williams to W. G. Ewing,
November 4, 1839, in Ewing Collection, Indiana State Library.
13 See below, 331n-32n. Protests against the bill are printed in the In-
dianapolis Indiana Democrat, January 21, 1840.
14 See below, 423-28, 429, 431. The Treasurer of State reported in
December, 1841, that $1,448,000 in treasury notes had been issued up
to that time; of that amount, $1,292,700 was still in circulation. Docu-
mentary Journal, 1841-42, House Doc. No. 5, p. 53.
is Indianapolis Indiana Journal, February 26, 1840.
42 Wallace Papers
Election of 1840
Disappointment in the results of the legislative session were
soon seemingly forgotten as the greatest election campaign yet
staged in Indiana got under way. Politics became the order of
the day. Whence emanated all the Whig enthusiasm that was
engendered as county after county became the scene of huge
gatherings? William Henry Harrison, Indiana's territorial gov-
ernor and the hero of Tippecanoe, had again been nominated by
the Whig party as their candidate for president. He was Indiana's
choice; they had a national standard bearer about whom they
could rally. A superb national organization was perfected to
guide the campaign and this in turn was extended to the state and
local level.
It was the year for the election of a governor in Indiana as
well as the President. During the fall of 1839 various candidates
were proposed by the two parties. Wallace had the support of
Marion County, and his re-election was also looked upon favor-
ably outside the capital.16 He realized his own weakness in being
closely associated with the internal improvement program, the
cause of Whig defeat in 1839, and offered to step aside for some-
one more acceptable. To a correspondent he suggested Jonathan
McCarty, former Congressman from the Fifth District, as one
who would stand the "ware and tare" of the election campaign
better than himself.17 Charles Dewey, member of the Supreme
Court, Joseph G. Marshall, of Madison, and John W. Payne, of
Corydon, were also mentioned as possible Whig candidates.18
As for the Democrats, Robert Dale Owen, of New Harmony,
was a possible candidate but declined before the state convention
met on January 8.10 Tilghman A. Howard, of Rockville, who
16 See especially Indianapolis Indiana Journal, September 21, October
26, November 8 and 16, December 13, 1839. These include quotations
from papers out in the state.
17 See letter of Wallace to Samuel Judah, September 23, 1839, below.
18 Bloomington Post, November 8, 1839; Terre Haute Wabash En-
quirer, January 15, 1840; New Albany Argus, quoted in Indianapolis
Indiana Journal, November 15, 1839.
19 Owen to M. R. Southard, December 12, 1839, in Southard Papers,
Indiana State Library.
Introduction 43
was serving his first term in Congress, received the nomination.
He would have preferred to finish his term but accepted the draft
of his party. Eight days later the Whig State Convention nomi-
nated Samuel Bigger, president judge of the sixth circuit. Both
men were well qualified for the governorship ; both were above
reproach so far as their own moral integrity was concerned ; and
neither had been actively associated with the internal improvement
program in the state.
Howard wished to remain in Washington until the adjourn-
ment of Congress, and so informed his constituents, but at the
dictates of party leaders finally returned home the last of June
to take an active part in the campaign. The Democratic candi-
date for lieutenant governor, Benjamin S. Tuley, had not been
able to do any campaigning either, having been confined to his
home for four months by illness. The Whigs in this respect had
a big advantage over the Democrats for Bigger and his running
mate, Samuel Hall, had been touring the state since the first of
April, making scores of speeches. However, the Whig enthusiasm
that reached from one end of the state to the other was generated
by the presidential campaign rather than by the state election. The
latter was merged into the national campaign, and the popularity
of Harrison over Van Buren, the Democratic candidate, was suf-
ficient to overcome the handicap the Whigs were laboring under
for their responsibility in the state's internal improvement fiasco
and financial condition.
The enthusiasm of the Whigs paid off first in the state elec-
tions held in August, with Bigger winning over Howard by a
vote of 62,932 to 54,274; the Whigs also regained their lead in
the General Assembly. In the presidential election of November
2 the Harrison electors defeated those of Van Buren by a vote of
63,000 to 51,000.20
No evidence has been found that Governor Wallace campaigned
for his successor, although he did give him his blessing at the
time of his nomination.21 But with the state election out of the
20 lndia?ia Election Returns, 1816-1851, 29-36, 148-50.
21 See proceedings of the convention in Indianapolis Indiana Journal,
January 20, 1840.
44 Wallace Papers
way, Wallace spoke at least at one Harrison rally, the one held
in Indianapolis in October;22 he also joined other Hoosiers who
made the trip to Washington to attend Harrison's inaugural the
following March.23
The Democratic press claimed that the Whig success in the state
was derived from party members stuffing the ballot boxes with
20,000 illegal votes. This contention was based on the theory
that the votes cast in any election were always less than the num-
ber of polls; in this case there were over 117,000 votes cast, yet
the number of polls reported to the State Auditor was only
slightly over 100, 000.24 Governor Wallace had another explana-
tion of this phenomenon, which was that between 18,000 and
20,000 men had failed to pay the poll tax.25
Final Message
With the presidential election out of the way, Governor
Wallace had one month remaining of his term as governor. As
he sat down to prepare his final message to the General Assembly,
it was no doubt with a considerable sense of satisfaction that he
dwelt upon the significance of the national election : the alarming
extent of power manifested in the executive branch of the govern-
ment for the last twelve years had been overthrown; the people
of the United States had "evinced to the world that the rod of
proscription cannot intimidate, that bribery cannot purchase, and
that fraud and corruption cannot seduce them from the faithful
discharge of their high and solemn duties."26
Turning to a less pleasant subject, the Governor noted the
small balance remaining in the state treasury and called on the
legislators to exercise the utmost economy in providing for the
needs of government. One way in which he thought the state
might save money would be to reduce the number of members in
22 Indianapolis Indiana Journal, October 10, 1840.
23 There are references to Wallace's attendance at the inaugural
in the Noah Noble Papers of March 15 and 21, 1841.
24 Indianapolis Indiana Democrat, December 12, 1840.
25 See below, 459.
26 See below, 454.
Introduction 45
the General Assembly from 150 to 90, a suggestion that apparently
did not meet with any response in the legislative halls.27
The suspension of the public works and the general stagnation
of all kinds of business had in turn affected the value of property
to a greater extent than had been anticipated. This combined with
the fact that a considerable amount of property was still escaping
taxation did not forebode a very encouraging prospect for the
future ; then, too, it will be remembered that the tax levy for
1840 had been reduced from 30 to 15 cents on each $100 of
valuation.
The public debt was approaching thirteen million dollars, and
of this amount about three million was still due from the pur-
chasers of state bonds. The Governor warned that the greater
portion of this might ultimately be lost to the state. As visible
evidence of what had been done with the borrowed funds, he
could point to 25 miles of railroad, 42 of macadamized roads,
and 230 miles of canal, plus two millions of dollars in bank and
sinking fund stocks. With approximately $600,000 in interest
coming due in 1841, he estimated that the state could raise only
$150,000 independent of taxation. Thus the legislators were
faced with the unpopular task of levying a substantial tax to make
up the remainder. The Governor hoped that there were no popu-
larity seekers in the legislature, and went on to say that he had
faith in the people being willing to shoulder the load. "Ours are
a debt paying people; and the promptness with which they have
denied their confidence to every unprincipled demagogue who
dared to preach a contrary doctrine, is the proudest evidence of
the stern moral honesty that pervades the mass. They have com-
plained, and perhaps in many instances justly, of mismanagement
in the conduct of their affairs; but, then, whoever infers from
that, that they could be persuaded to repudiate their honest debts,
is ignorant of their character, and but poorly appreciates their
firmness and integrity."28
With a change of administrations in Washington, the Governor
was hopeful that the proceeds from the sales of public lands might
27 See below, 456-57.
28 See below, 463.
46 Wallace Papers
yet be distributed to the states, in which case he estimated that
Indiana would be entitled to about three million dollars as her
share.29
On the question of what to do with the uncompleted public
works, the Governor thought it imperative that two or three of
them be completed, and backed up his plea by citing prices that
agricultural produce was bringing in the interior as against the
price that could be obtained on the Ohio River.30
The five-year contract which the state had with Patterson and
Hensley for the management of the State Prison was about to
expire; the legislators were reminded of this fact, and that it
would therefore be an auspicious time to make the changes and
improvements that had been contemplated.31 Lack of funds pre-
vented the Assembly from making all the reforms that were
needed, but they were able to improve the system of letting out
the prison to the highest bidder by making the office of superin-
tendent appointive by the governor. However, his compensation
was to be contingent upon the net profit to be derived from prison
labor; thus there would still be pressure to make as much as
possible.32
Although the Governor had never failed in any of his messages
to cite the need for institutions of learning, yet at the same time
he favored internal improvements above education when it came
to the matter of appropriations. Now in his last message, he
made a final plea for an improved system of common schools.
29 See below, 464-65.
30 See below, 470-71. An act was passed during this session classifying
the public works. Construction of the Whitewater Canal from Brookville
to Connersville, the Madison and Indianapolis Railroad from Vernon to
Edinburg, and the removal of obstructions in the Wabash River were
placed in the first class and all the other works enumerated in the 1836
act were placed in the second class. The act also provided that individ-
uals or corporations be given the privilege of taking up and finishing
any portion of the public works that remained unfinished. Laws of
Indiana, 1840-41 (general), pp. 207-8. Nothing was done under this
act. The following year further legislation was enacted to provide for
turning the improvements over to private companies. For the final dis-
position of the public works, see Esarey, History of Indiana, 1 :419-46.
31 See below, 457-58n.
32 Laws of Indiana, 1839-40 (general), pp. 136-40.
Introduction 47
"Our State can never attain the proud distinction we fondly antici-
pate for her, until an efficient system of common school instruc-
tion be established. . . . The blessings of the common school are
dispensed far and wide, to the obscurest corner of the State, and
pervade all the strata which compose the social fabric. . . . The
men of the forest and the prairie — our support in peace and defense
in war — should be furnished with the means of educating their
rising offspring." The beneficent effect of such a course would be
demonstrated, he said, "in the virtue and intelligence of the people
— in their enlightened attachment to their country, and to the
free institutions which bless and exalt it."33 Practically no advances
were made in the field of education during Wallace's administra-
tion other than those achieved by private and church schools.
At the close of his message, the Governor summarized the task
of the Assembly in this fashion : "to curtail every expense as far
as practicable; to husband our resources carefully, to apply them
judiciously, to resort to taxation only when all other just and
proper expedients fail; and to maintain at all hazards, the credit
of the State unimpaired." In whatever manner the legislators
and their constituents might judge his administration, he wanted
it known that he had given his undivided attention to the trust
confided to him; that he had endeavored to discharge his duties
with fearless independence, and with an eye single to the interests
of his fellow citizens. He felt that judgment should not be
rendered until after the lapse of a few years, in order that a
more objective view might be taken of the events that had tran-
spired and how they were met.34
Now, almost a century and a quarter later, what is the ver-
dict? Probably every one will agree that Wallace was not a
strong executive. Even those who held positions of authority in
his administration do not seem to have looked to him for leader-
ship, nor did the members of the Whig party. His plan of pro-
ceeding with all the lines of improvement simultaneously instead
of concentrating on a few at a time was later acknowledged by
his own party to be wrong. His modified plan of concentrating
33 See below, 474-75.
34 See below, 476-77.
48 Wallace Papers
the work on each particular line, instead of scattering it along
the line, was never carried out. He apparently did not try to
exercise any authority over either the members of the Board of
Internal Improvement or the Fund Commissioners. His appoint-
ments to the latter office were not always the best; at least some
of the appointees were more interested in their own well being
than that of the state. No evidence has been found that he
corresponded with the members of his official family or with party
leaders. He apparently did visit the various lines of improvement,
watched their progress, listened to complaints, etc.
Two of the three General Assemblies of his administration had
Whig majorities, and the third had a Whig majority in the Senate.
His relations with the members seems to have been cordial ; there
is no evidence that he tried to influence legislation beyond the
recommendations made in his annual messages. Only in one or
two instances did he use his veto power, and these concerned local
legislation. Once he withheld his signature from a bill, but
allowed it to become a law because it was needed.
Concerning his relations with the judicial branch of the govern-
ment, only in one instance did the editors of the present volume
find a complaint that Wallace had abused his power in remitting
fines and issuing pardons. The Indiana Journal defended him on
that score, asserting that they knew he did not remit all fines,
even though recommended to do so by his warmest friends. If
the judges and officers of the court as well as members of the
jury recommended a remission or pardon, it was difficult for the
Executive to turn down the plea, inasmuch as they were the most
competent advisers he could have.35
That David Wallace was upright in character, there is no
doubt; no breath of scandal seems to have touched his private life,
and very little his public life. In a period known for its oratory
and orators, Wallace was considered outstanding. The reader of
today who peruses the few speeches of his that have been preserved
may fail to find anything very unusual in them except for a phrase
now and then ; but delivered in his inimitable style, they appar-
ently were highly pleasing to the audiences of his day.
35 Indianapolis Indiana Journal, October 26, 1839.
Introduction 49
Wallace's predecessor, Noah Noble, had not been a strong ex-
ecutive either, yet judging from his correspondence after leaving
office, he was still looked upon as the head of the party by many
of his contemporaries. This was no doubt due in part to his
position as head of the powerful Internal Improvement Board.
Since it was under his administration as governor that the Mam-
moth Internal Improvement Bill was passed, and since the Internal
Improvement Board was charged with carrying out the provisions
of the act, the opposition party placed much of the blame for the
system upon him.
Wallace had said in his inaugural message that the task of his
administration was to be confined to executing a program that had
already been formulated before he took office. Taking this narrow
view of the responsibilities of his office, he no doubt felt that he
had fulfilled the task for which he had been elected.
After 1840
Immediately upon turning the affairs of government over to
his successor, Wallace resumed his law practice. Instead of return-
ing to Covington, he opened an office in Indianapolis, and the
family moved to a home at the corner of New Jersey Street and
Massachusetts Avenue.36 The former governor had barely gotten
started in his law practice when he was called to run for Congress
from the Sixth District. The district convention was held at Dan-
ville on March 26; Wallace was not an avowed candidate but
he was the choice of the nominating committee and their nomina-
tion was accepted by the delegates.37
The Indianapolis Indiana Democrat immediately said it was all
planned in advance; that Noah Noble wanted to be appointed
minister to Spain, and wanted Wallace out of the way (the infer-
ence being that President Harrison might appoint Wallace instead
of Noble).38 Judging from Noble's correspondence, both Wallace
36 William Watson Woollen, Reminiscences of the Early Marion
County Bar (Indiana Historical Society Publications, Vol. 7, No. 3, In-
dianapolis [1917]), 199.
37 Indianapolis Indiana Journal, March 26, April 6, 1841.
38 Indianapolis Indiana Democrat, April 2, 1841.
50 Wallace Papers
and Noble as well as other Hoosiers hoped to receive appoint-
ments under the new administration. Noble declined the position
of commissioner of the General Land Office which was offered
him and said he would not accept those of governor of Iowa
Territory or minister to Spain should they be tendered. Noble
did not attend Harrison's inauguration, but left for the East two
weeks later. En route he met Wallace, who was on his way home
from Washington, and reported that the former governor was
very cool toward him.39
On April 10 the word reached Indianapolis of President Harri-
son's death on the fourth. The people, and especially the Whigs,
were stunned. They had conducted the 1840 campaign without
a platform. The vice-president, John Tyler, was not bound by
any pledges, and the Whigs were certain that he would be wooed
by the southern Democrats.
The Congressional election was held on May 3, 1841, instead
of in August in order that Indiana might be represented in the
special session of Congress that had been called by President
Harrison to meet on May 31. Wallace's opponent on the Demo-
cratic ticket was Nathan B. Palmer, former Treasurer of State.
The Whig enthusiasm of the previous year was still strong enough
to bring about a Whig victory in all but one of the Congressional
districts. The only reason for the one Democratic victory was
that in the Fifth District two Whigs (Caleb B. Smith and Jona-
than McCarty) insisted on running and thus split the Whig
vote. The Whigs elected in addition to Wallace were George H.
Proffit, Richard W. Thompson, Joseph L. White, James H.
Cravens, and Henry S. Lane. Thompson, White, and Cravens were
neophytes, as well as Wallace.40
The special session met on May 31 under unprecedented cir-
cumstances. For the first time in the history of the country, a
vice-president had succeeded to the presidency. Though the
Whigs had a majority in both the House and Senate, with Tyler
39 Noble to his son-in-law, A. H. Davidson, March 21, April 5 and
27, 1841, in Noble Papers, Indiana State Library; Indianapolis Indiana
Democrat, January 26, 1841.
40 Indiana Election Returns, 1S16-1S51, 101-5.
Introduction 51
as president, the future was uncertain. Henry Clay was in the
Senate and about a week after the session started introduced a
series of resolutions which some called the belated announcement
of the Whig platform. They advocated the repeal of the sub-
treasury act, incorporation of a bank adapted to the wants of the
people and the government, provision for an adequate revenue by
imposition of duties on foreign goods, and distribution of the
proceeds from the sale of public lands.41 Wallace was placed
on the committee on military affairs.
There was no difficulty in repealing the subtreasury act, but a
bill re-establishing a United States Bank was vetoed by President
Tyler. A second bank bill, framed to meet his objections, was
likewise vetoed. The Whigs were up in arms, and a few days
later issued an address to the people of the United States which
was a severe arraignment of the President's course.
Clay's proposal for the distribution of the proceeds from the
sale of public lands fared better than the bank bills. It passed
the House on July 6 and became a law on September 4. The spe-
cial session ended on September 13; Wallace had not entered
into any of the debates. It was scarcely three months before the
regular session of Congress began on December 6. This session
was marked by two episodes that were calculated to make it
memorable : one, John Quincy Adams' battle for the right of
petition ; and second, Clay's farewell to Congress after thirty-six
years of service. A farewell dinner was held for him on March 24.
During the summer Wallace made his one and only speech in Con-
gress, speaking in favor of the tariff bill. The session proved
extraordinarily long, not coming to a close until August 31, 1842.
Again there was only a brief interim until the members were
called back for the last session of the Twenty-seventh Congress.
The Whigs continued their war against President Tyler, and on
January 10 a proposal was made that he be impeached. This was
dropped without coming to a vote. One of the last acts of the
41 For an account of this special session and the two regular sessions
of the Twenty-seventh Congress, see Charles Roll's Colonel Dick Thomp-
son, The Persistent Whig (Indiana Historical Collections, Vol. 30, In-
dianapolis, 1948), 53-71.
52 Wallace Papers
session was an appropriation of $30,000 to test the value of Samuel
F. B. Morse's electro-magnetic telegraph. The debate on it was
not taken seriously by many Congressmen, but Wallace and the
other Indiana members supported it.
Returning home in March of 1843, Wallace was a candidate
for re-election. His opponent this time was William J. Brown, a
former secretary of state. Since the last election, the state had
been redistricted and was now entitled to ten members of Con-
gress. The election was a Democratic landslide this time, with
eight Democrats being elected and only two Whigs. Thus two
and a fourth years after his first retirement from public office,
Wallace was again free to resume his private life and engage in
the practice of law. This was interrupted in 1850 when he was
chosen to represent Marion County in the Constitutional Conven-
tion. Here again he did not take an active part in the debates.
The next public office tendered him was that of judge of the
Marion County court of common pleas in 1856. He was still
serving in that capacity when he died on September 4, 1859.
In addition to three sons by his first marriage, Wallace was
survived by his second wife and two daughters and a son by this
marriage, namely Mary, born 1837; Agnes, born 1849; and
David, Jr., born 1852.
MESSAGES AND PAPERS
Wallace: Inaugural Address to the General Assembly1
[December 6, 1837]
Fellow-citizens of the Senate and of the House of
Representatives :
Deeply impressed with the responsibility of the station which
the kindness of my Fellow-Citizens of Indiana has selected me to
fill, I embrace this opportunity of tendering to them, through you,
my most grateful acknowledgments for this distinguished mani-
festation of their confidence, together, with a brief expose of the
views and opinions I entertain on exciting questions of State
policy. In taking this step, I feel, that I am only following in
the wake of all my predecessors. — They have, I believe, without
a single exception, deemed it most respectful and proper, prior
to entering on the discharge of their official duties, to publish,
to the people, an epitome of the principles, by which they design
to be governed during their continuance in office. Upon this cus-
tom I have no desire to innovate; and, if I had, this is certainly
not the time to attempt it. The surprising increase of wealth and
population which the history of Indiana for the last eight years so
cheeringly exhibits; the acknowledged extent and fertility of her
soil ; the singular variety of stirring and important interests grow-
ing out of these circumstances; added to the bold, daring, and
gigantic efforts she is now making to ensure a full and speedy
developement of all her resources, calls, not only, for the undivided
application of the whole energies of her people, but, also, for the
unconcealed opinions of her public servants.
i Senate Journal, 1837-38, pp. 26-33. For the message of the outgoing
governor, Noah Noble, see ibid., 9-22, reprinted in Messages and Papers
of Noah Noble, 579-603. Noble's message contained a summary of the
work of the various state agencies during the year 1837, and should
be studied along with Wallace's message.
(55)
56 Wallace Papers
In acquitting myself of this delicate task, I frankly confess,
before hand, that the consciousness, that none of the duties that I
shall likely be required to perform, will consist, either, in design-
ing, limiting, or establishing any new system of State policy or
improvement, is to me, a source of great and peculiar relief.
Because, I cannot but look upon these perplexing matters as being,
already, settled ; the controversies concerning them as ended ; and
the scale and character of our future plans and operations, for
years to come, as, in a measure, permanently fixed. If, in this, I
do not err, the duties devolving upon each and all of us, as mere
agents of the people, are, to my mind, both obvious and easy of
comprehension. They are, evidently, to be confined to the labors
of execution ; to the toilsome, vexatious, and difficult endeavors
to carry out and perfect the magnificent system of State Improve-
ment which the legislation of past years has so laboriously
matured.
In assuming such grounds I am not unconscious that, in the
estimation of a very respectable portion of my fellow-citizens, it
is considered that the state has undertaken entirely too much :
that the very attempt to prosecute so great an enterprise, with the
means in possession or expectancy, must, inevitably, involve us in
debts beyond our abilities to pay; and, thereby, entail upon us, the
worst of all evils — oppressive and ruinous taxation, without even
the hope of relief or mitigation.2 — I am not unaware too that, in
anticipation of such fearful consequences, prediction after predic-
tion has, repeatedly, escaped from intelligent lips calculated to
chill the ardour and to extinguish the noble spirit of daring which
seems to have animated the bosoms of a large majority of the
people. But the astonishing success which has thus far attended
our progress: the realization of all, and more than friends the
most sanguine dreamed of; nay, the flattering auspices of the
future, should, it appears to me, dispel every doubt and quiet every
fear which such boding prognostics may have created. To relieve
myself, however, in speaking so encouragingly, from the imputa-
tion of overwrought zeal, perhaps, from the charge of being too
deeply enamored with the enterprize, itself, to exercise a sound or
- See above, 14-17.
Wallace: Message, December 6, 1837 57
unbiassed judgment, permit me, by departing a little, from the
course usually adhered to on occasions like the present, to present
you with some of the most important facts which the experience
of the past most indubitably furnishes.
From documents that will in due time be laid upon your tables
by the proper department, I have, at the expense of some labor,
and with a view to the assurance of my own mind, gleaned a
few interesting items, of statistics which, seem to me, to exhibit
the truest picture of the strength and resources of the State as
they now are, together, with the best data, upon which, to build
calculations for the future. These have been taken uniformly, by
me, from the official returns of the assessment of taxable property,
made from the several counties in the State, agreeably to the
requisitions of law.
If the rule, which some political economists have laid down be
correct, that the wealth of a State consists in the number and
industry of her population, Indiana has, surely, the most abundant
reason to feel confident in, and proud of, her present condition and
prospects. The yearly accession she has made to these undoubted
elements of wealth has been no less cheering than wonderful. To
prove this take the returns just referred to — the returns for in-
stance, of 1830, '35, '36, and '37, now on file in the office of the
auditor of State, and compare them. These show that the taxable
polls of 1830 amounted to 52,196; that the same for 1835
amounted to 64,289; for 1836 to 77,438; for 1837, the present
year, to 85,000, or thereabouts.3 I am here constrained, however
3 A report made by the State Auditor on December 28, 1835, gave
the number of taxable polls for that year as 64,289. However, in an
earlier report, dated December 16, 1835, he gave the number of polls
in 1834 as 74,358 and the number in 1835 as 77,041. Documentary Jour-
nal, 1835-36, [Nos. 9 and 17]. In 1837 the number of polls was reported
to be 82,921. From this number, the auditor estimated that the state
would receive about $36,500. Senate Journal, 1836-37, p. 58.
A census of the white males over twenty-one years of age, taken in
1835 for the purpose of reapportioning the members of the General
Assembly, reported the number as 92,261, of whom 3,374 were exempt
from payment of a poll tax. Documentary Journal, 1835-36, [Nos. 13, 14].
Revolutionary soldiers were exempt from payment of the poll tax and
other men over thirty-five might be exempt because of physical disability
or poverty. Revised Laics of Indiana, 1831, p. 427.
58 Wallace Papers
to acknowledge that, these returns are, in many respects, glaringly
imperfect ; that they fall greatly below the true estimate as the
aggregate vote for Governor, this year, most conclusively demon-
strates. This vote amounts to between eighty-three and eighty-
four thousand, a little less, you perceive, than the number of
taxable polls returned, whereas, in truth and in fact, all parties
will admit that, not less than fifteen or twenty thousand voters
either remained at home or did not vote.4 But still, imperfect as
these returns are, they sufficiently indicate the progressive increase
of population to answer our present purposes. They furnish the
friends of the present system of State policy and improvement
with the most exhilarating results. Instead of witnessing the
gloomy process of depopulation, as was so confidently predicted,
they have been gratified with the exhibition of scenes the very
reverse. The tide of emigration has continued to swell around
us beyond all former example ; so much so, that the increase of
taxable polls of the last two years, exceeds, the increase of the
taxable polls of the five preceding years, upwards of eight thou-
sand: In other words the increase of the last two years amounts
to 20,711 polls, whilst the increase of the five preceding years
amounts to only 12,093. I leave the facts, with you, without com-
ment. Indeed, they need none ; the language they speak and the
conclusions they lead to, are as pointed and convincing as the
most fastidious friendship could desire.
Again : On the subject of taxable property, the same documents
display similar results equally as cheering and quite as conclusive.
For the year 1830, it is true, we have not the means of ascertain-
ing the aggregate value of property throughout the state — the
revenue of this year having been collected under the old system5
— but, for the years 1835, '36, and '37, we are not left so com-
pletely in the dark. The new mode of taxation then, for the first
4 The number of votes cast in the gubernatorial election was 82,989.
Three years earlier 64,030 votes were cast for governor. In the presi-
dential election of 1836 a total of 74,423 persons voted. Indiana Election
Returns, 1816-1851, 21-28, 145-48.
5 The ad valorem system of taxing lands was introduced in 1835.
Laws of Indiana, 1834-35 (general), 12-22. Previous to that time lands
were classified as first, second, and third rate and taxed accordingly.
Wallace: Message, December 6, 1837 59
time adopted and enforced, shows us that the sum total of all the
taxables of these years ranges, nearly, as follows: that is to say,
for the year 1835, 47,353,885 dollars; for 1836, 82,163,687 dol-
lars; for 1837, 98,500,000 dollars. Do these flattering results, I
ask — below the true estimate as they confessedly are — indicate, in
the remotest degree, that any of the great fountains of our wealth
have been drying up? With the utmost defference for the adverse
opinions of others, I humbly conceive not. The Canal Commit-
tees of the Senate and House of Representatives last winter in
their report, calculated, only, upon an increase of taxables from
year to year at a rate of ten per cent. Thus far, at least, they
have missed the mark widely. Instead of ten per cent, the returns
of the present year exhibit an increase of near twenty.
If we descend from generals to particulars, the foregoing result
will not be materially changed ; but, on the contrary, we shall
still be cheered by the discovery of new facts, all, alike tending
to sustain and confirm the people in the course they are now pur-
suing. Take, for example, the eighteen counties bordering on the
Ohio, including all the counties south of White river, and we find
that, even there, in the oldest settled part of the state where the
population, wealth, and improvements are comparatively fixed,
and, consequently, less liable to fluctuation and change, the tax-
able polls increased, the present year, 1058, and the value of
taxable property 2,405,838 dollars. I am not mistaken in this
result: Because the returns of 1837, show the taxable polls of
these counties to be 19,178, and the amount of taxable property,
25,442,307 dollars, whilst, the same returns for 1836 only give us
18,120 polls, and 23,036,469 dollars of taxables.
But to be more special still: Select the counties of Spencer,
Perry, Crawford, Harrison, Clark, Jackson, Switzerland, and
Ripley — through which none of the contemplated works of In-
ternal improvements are to pass — and how stands the account
there? Why, in 1836, they returned 7,898 polls and 8,176,374
dollars of taxables, and, in 1837, 8,200 polls and 8,798,540 dol-
lars of taxables, showing the increase of the present over the past
year to be 302 polls and 623,166 dollars of taxables. A result,
certainly, which should be hailed by the friends of Internal Im-
60 Wallace Papers
provement as peculiarly ominous and encouraging; a result, which
absolutely demonstrates that no part or portion of the State has
been retrograding: that no part or portion of our fellow-citizens
have been flourishing at the expense or upon the means of their
neighbors; in short, that while the north has been springing for-
ward with amazing rapidity, the south — the patriotic south ! has
been pursuing the even tenor of her way, prospering, even in those
parts where no adventitious circumstances have been permitted to
assist her.
The foregoing remarks being strictly applicable to our past and
present condition, a glance at the future may not, perhaps, be
unprofitable. We are all equally interested in the enquiry, What
assurances have we that these prosperous circumstances are to
continue, or, that the sources of our revenue are to expand in
proportion to the increased demand that, we know, must be made
upon us from year to year, to defray the interest upon our rapidly
accumulating debt ? In finding an answer to these questions, I
am happy to say, that, we are not left to the uncertain guidance
of mere conjecture. We have at our command, facts and data,
as undoubted in their character, as those upon which we have just
been commenting. By referring to the Reports of the Commis-
sioner of the General Land Office, for a series of years back, we
ascertain from them, the precise number of acres of the public
land that have been sold each year within the limits of the state,
and, consequently, the exact annual additions that will constantly
be making to the present amount of our taxable land, as far in
advance as 1841. For the satisfaction of my fellow-citizens, I
here, furnish them with these important results. The quantity of
public land sold, for instance, in 1832, amounted to 546,444
acres — these, as a matter of course, became taxable the present
year; in 1833, 555,000 acres were sold — which become taxable in
1838: in 1834, 585,000 acres were sold — which become taxable
in 1839: in 1835, 1,586,904 acres were sold — which become tax-
able in 1840: in 1836, 3,249,210 acres were sold — which become
taxable in 1841: making altogether a sum total of 6,522,958
acres, which, in 1841, is to swell the tax list of that year over
and above the tax list of 1836: that is, instead of the five millions
Wallace: Message, December 6, 1837 61
of acres and upwards subject to taxation in 1836, we shall have
twelve millions and upwards subject to taxation in 1841. Is not
this a most animating result? Could our prospective advancement
in all the substantial elements of wealth be presented in bolder
relief?
But again; in looking forward to the increase of taxation, it is
quite natural that we should enquire how this burthen is to be
distributed? Whether equitably or not? Whether it is so ar-
ranged that those who are most benefitted shall be required to pay
most? Prompted by curiosity, I was led to a somewhat minute
examination of these points, and I found, first, that of the 81
counties that appear upon the tax list of the present year, 52 of
them are directly and immediately interested in the prosecution of
some one of our public works, and 29 that are not; secondly, that
the sum of all the taxables returned by the 52 counties this year,
amounts to near seventy-six millions of dollars, while the same
returned by the 29 counties, amounts to but twenty-two and a
half millions; establishing the fact, to the satisfaction of the most
scrupulous, that the former counties, even, of the burthens and
expenses of the present year, pay near three and a half times as
much as the latter. And I take it, that it needs but a moment's
reflection to decide that, this ratio, great as it is, must continue to
increase for years to come : For not less, perhaps, than eight-tenths
of the six and a half millions of acres of land, which we have
seen are to become taxable in 1841, lie in some one of the 52
counties, or in the north. And there is the north too, with her
port of entry and harbor on the Lake; her shipping list, strange
as it may sound to our ears; her one hundred thousand dollars
worth of exports — her three hundred arrivals and departures of
vessels, of various descriptions, the present year ;6 her iron
6 From what source the Governor obtained these shipping figures is
not known. A Congressional document giving the exports and imports
of each state from October 1, 1836, to September 30, 1837, does not give
any figures for Indiana. See House Executive Documents, 25 Congress,
2 session, Vol. 10, Doc. 372, pp. 294-95. In 1834 there were eighteen
steamboats operating on the Great Lakes and their total business (imports
and exports) was reported to be $6,272. Six years later there were
forty-eight steamboats and the business west of Detroit amounted to
62 Wallace Papers
foundries;7 her numerous manufacturing establishments; her en-
terprising population — her flourishing towns and villages — the
north, I say! hold out to us these most flattering indications that,
she too, will be forthcoming at the hour of need — perhaps, by '41,
certainly by '45 — with her taxable list of thirty or forty millions
of dollars.
With all these facts before us, can the remarkable circumstance
— which made false prophets of so many of us — of the state's pro-
curing last summer — in the midst of the universal wreck of credit
which then pervaded the whole country — the necessary amount of
funds, and on terms too as favorable as she asked for — remain
any longer an enigma ?s I think not.
A question of very considerable importance, bearing directly
upon the mode and manner of prosecuting our public works, was
agitated amongst the people during the last summer with great
energy and zeal ; I mean the question of classification. A more
imposing one, perhaps, has seldom or never been introduced to the
consideration of any community — one, better calculated to rally
to its embrace a formidable host of friends. Concentrate, say the
advocates of this policy, the entire energies of the state upon some
$201,838. Merchants' Magazine and Commercial Review, 15(1846) :349-50.
However, less than half the tonnage on the Great Lakes in 1838 was
steam-operated. R. Carlyle Buley, The Old Northwest, Pioneer Period,
1815-1840 (2 vols. Indiana Historical Society, 1950), 1:424. The fur-
trading business carried on at South Bend by Lathrop M. Taylor would
have accounted for a part of the exports. See Indiana Magazine of His-
tory, 45(1949) :369-82.
7 The St. Joseph Iron Works had already been organized at Misha-
waka by Alanson M. Hurd to use the iron ore available near that town,
and in February, 1838, the Mishawaka Iron and Manufacturing Company
was incorporated by John M. Sherman and others. Timothy E. Howard,
A History of St. Joseph County Indiana (2 vols. Chicago, 1907), 1:323.
The South Bend Free Press hailed this new development as "an event
of almost incalculable interest to our whole country." Heretofore, the
enormous cost of iron had retarded the improvement of the country.
Governor Wallace was using a stove made by the former company
in his law office in 1841. Citizens of Indianapolis were invited to stop
and see it. Indianapolis Indiana Journal, January 16, 1841, p. 1.
8 The reference is to the success of the Fund Commissioners in bor-
rowing over two million dollars at 5 per cent interest for internal im-
provement purposes. See below, December 11, 1837, for the report of
the commissioners.
Wallace : Message, December 6, 1837 63
one or two of the works, at a time, and finish them before any of
the remainder are touched, and so on in succession until the
whole are completed. Now the objection to all this, is not, nor,
cannot be, to the abstract proposition itself, but purely to what
must grow out of the effort to apply it — a division of friends —
the clashing of adverse interests — in a word, the utter prostration
of the whole system. Believing that such would be the result of
its adoption, I have heretofore, on all fit occasions, declared pub-
licly to my fellow-citizens, my decided hostility to it ; and I have
now only to add that I have seen nothing since to justify a change.
Still if, in all this, I am mistaken — if my fears and apprehensions
are groundless, here, I am happy to say, is the place to correct
them. I stand pledged to the people, in this matter, to conform to
their will as they may see fit to express it through a majority of
both branches of the legislature. But in reality are these fears
imaginary? Let us endeavor to test them. Some of the works
must be postponed. But whose shall they be? Are you of the
north instructed by your constituents to vote that their work shall
be deferred until all or a part of the rest are completed ? I put
the same question to you of the Wabash — of the south — of the
centre — of the east? If you are, why, then, every difficulty van-
ishes— no dissatisfaction can accrue — and the plan can be carried
out successfully; and therewith I shall be content. But if, as I
am led to believe, your instructions are directly the reverse — if
you are sent here by your constituents to urge a speedy and ener-
getic prosecution of the several works in which they are interested,
I cannot, for the life of me, see how you are to classify them, in
the way proposed, without engendering such hostilities and creat-
ing such divisions among you, as to prove fatal to the whole enter-
prize. In anticipation of such consequences, and with a view to
escape from them, I have, in other places, suggested a different
plan ; a plan that can only be carried into effect by liberally in-
dulging in a spirit of compromise. It is to concentrate the means
of the state on portions of each work at the same time, commenc-
ing at the most profitable and commercial points to be designated
by the legislature, or Board of Internal Improvement ; to com-
plete these portions respectively before others are touched ; and as
64 Wallace Papers
soon as completed put into use, in order that the state may be real-
izing something from them whilst she is in the act of finishing the
remainder. In this way conflicting interests may be reconciled,
harmony preserved, and the great mass of the people enlisted on
the side of our Improvements. A point, by the way, of incalculable
importance. For let the people of Indiana be united, let their
means and resources be applied with all their skill and energy, and,
I could almost venture to predict their achieving impossibilities.
But sow the seeds of discord instead ; call up the demon spirit of
sectional jealousy to mingle in their councils, and the giant will
instantly shrink into the dwarf, and all their efforts be attended
by the mortifying concomitants of failure and disappointment.
It is highly necessary also, in the prosecution of our public
works, that strict economy should be observed in the administra-
tion of every department ; lavish or unnecessary expenditures
should be carefully avoided ; the people should be satisfied that
every dollar they appropriate shall be skilfully and legitimately
applied and scrupulously accounted for ; in fine, that such a line
of policy should be selected and rigidly pursued as will tend most
to relieve them from the burthens of taxation, and yet, attain for
them, with commendable rapidity the great end desired.
Closely and inseparably connected as is the cause of education
with the prosperity and successes of any people, it is unquestion-
ably, the part of wisdom, and one of the first requisites of prudence
in us, neither to forget nor lose sight of it in our zeal for the
achievement of other objects. And I am proud to say that hitherto,
we have not. The funds that have been set apart for education
purposes in Indiana, are truly great and munificent, and need
only, a corresponding energy and foresight in the application of
them to procure the happiest results — to carry the light of intelli-
gence and the spirit of inquiry into every family circle in the
State. Entertaining such sentiments, I hope I need scarcely add,
that I shall cheerfully endeavor to devote whatever ability or
influence I may possess — official or otherwise — to aid in its pro-
motion ; to cheer its friends ; and to rally to its support the good
will and the best regards of my fellow-citizens generally.
Inasmuch, too, as the great and paramount interest of the State
Wallace: Message, December 6, 1837 65
is, from the peculiarity of her position and soil, agricultural, it
will at all times afford me unmingled satisfaction to contribute
any and every thing in my power to encourage and sustain it. It
is, recollect, for this end (and surely a nobler cannot be conceived)
that the fortunes of Indiana have been ventured on the construc-
tion of so extensive a system of internal improvement. The friends
of this system ardently hope, that the day will not be far distant
when the million freemen whose homes are to be reared and whose
industry is to subdue the almost interminable forests in the in-
terior, shall be enabled, by it, to enjoy like facilities — like advan-
tages in commercial transactions, as are at present possessed by our
more fortunate neighbors who dwell upon the banks of the Ohio.
And, permit me to remark, that I hail the spirit displayed through
the numerous agricultural societies and fairs created and held the
past year in every part of the State as furnishing the best guar-
antee of future success and excellence in every branch of mechani-
cal and agricultural skill. And to my fellow-citizens who are
engaged in, at once so innocent — so happy, and so beneficial a
scheme of improvement as these same societies indicate, in the
utmost sincerity of my heart, I say, God speed you.
Having now freely and frankly communicated my sentiments
in regard to the most prominent questions that are likely to engage
your thoughts and deliberations for some time hence, I have only
to add that I shall diligently seek to co-operate with you in the
furtherance of all measures that may have for their object the
prosperity and happiness of Indiana. And although I shall not
pretend to bring to your assistance the aid of superior abilities,
yet am I unwilling to acknowledge that I shall be behind you in
the will or the inclination to serve my State to the utmost. And
being that we are now on the threshold of our official intercourse
and duties, suffer me in conclusion to supplicate Almighty God
to smile upon our labors ; to light up before us the path of duty ;
to improve and direct our judgments; to inspire our hearts with
becoming sentiments of kindness and affection for one another ;
and, finally, to bestow upon us the richest reward public servants
can aspire to — the thanks, the commendation, and the support of
intelligent constituents.
66 Wallace Papers
Treasurer of State : Annual Report1
Treasury Department,
Indianapolis, 7th Dec. 1837.
The Treasurer of State, in obedience to the directions of the
"Act concerning the Auditor of Public Accounts, and Treasurer
of State," submits the following report of the Revenue and Ex-
penditures of the State, . . . from the 1st of December, 1836, to
the 30th of November, 1837, both inclusive.
Receipts during the fiscal year from revenue:
Receipts during the fiscal year of 1836 60,081 88
Receipts during the fiscal year of 1837 4,355 35
Rents paid by Superintendant of State
Prison 700 00
Lots, &c. at Indianapolis 800 00
From sales of Michigan Road Lands .... 4,346 17
Estates without heirs 63 50
Incidental payments 511 50 6,421 17
The receipts and credits in the College branch of
the Loan office department have been —
Balance of this fund on hand at last report 963 36
Received from William Alexander, commissioner
of Reserve township in Monroe county 1,577 92
James Smith commissioner in Gibson county 383 00
Loans refunded 8,815 62
Interest on loans 3,802 37
The amount paid into the Treasury of Saline fund,
appertaining to the Loan office, has been from
Andrew Wilson, commissioner of Saline lands
in Orange county 1,754 17
Henry Young, commissioner of Washington Co 1,173 13
Milton M'Phetridge, commissioner of Monroe Co. 435 95
Loans refunded 1,720 00
Interest on loans 1,599 30
l Senate Journal, 1837-38, pp. 41-50.
Treasurer's Report, December 7 , 1837 67
Amount overpaid the present year by the Treasurer
of State 5,123 75
$ 98,206 97
The Expenditures and Liabilities of the Treasury
during the same period have been —
Over payments made by Treasurer of State during
the financial year of 1836, on account of the
Treasury proper $ 5,151 30
Pay and mileage of members of the Legislature, in-
cluding clerks, doorkeepers, &c 24,379 24
Printing and stationary 9,024 56
Specific appropriations 5,321 45
Contingent expenses 1,017 52
Premium on wolf scalps 412 50
Pay of Probate Judges 3,196 50
Pay of Executive officers 2,999 00
Pay of Judges of Supreme and Circuit Courts 9,558 39
Pay of Circuit Prosecutors 1,344 62
Pay of Adjutant and Quarter Master Generals 208 33
Payments on account of State House 6,641 51
Payments on account of State Library 301 29
Payments on account of State Prison 874 62
Payments on account of Presidential election 312 02
Estates without heirs refunded 28 28
Michigan Road Scrip redeemed 3,831 00
Michigan Road 980 19
School moneys refunded 575 09
Geoligical Survey 666 78
The disbursements on account of the College branch
of Loan office have been —
Payment on account of Indiana College,
including incidental expenses of Loan
office 4,650 19
Loans of College Fund 10,243 50
68 Wallace Papers
Payments and liabilities on account of
Saline fund subject to the Loan office
laws, are —
Over payments in 1836 77 67
Loans of Saline Fund 6,140 00
Saline Fund expenses
263 42
21,374 78
Warrants outstanding —
No. 2068 State Prison
$
37 50
375 00
$ 98,206 97
No. 2544 Judiciary
The Treasurer of State submits the following esti-
mate of the Receipts and Expenditures for the
year 1838:
Revenue of former years $ 1,000 00
Revenue of 1837 146,000 00
Rents from superintendent of State Prison 1,000 00
Making the total available means for 1838 $148,000 00
The expenses will be — as estimated below:
For salaries of Judges and
Prosecutors $14,900 00
Executive officers 3,200 00
Printing, stationary and distributing
laws 9,000 00
Legislature 35,000 00
Contingent and specific appropriations 5,500 00
Probate Judges 4,000 00
Wolf scalps 700 00
State prison 1,000 00
State Library 350 00
Adjutant and Quarter Master
Generals 150 00
State House 1,200 00
Geological Survey 1,500 00 76,500 00
Treasurer's Report, December 7 , 1837 69
To which may be added the following
liabilities of the Treasury, viz:
Over payments by the Treasurer $ 5,123 75
Unaudited claims 12,000 00
College fund in Treasury 648 58
Saline fund in Treasury 201 46
Estates without heirs 1,878 38
Conscientious fines to be distributed .... 543 00 20,395 17
$ 96,895 17
Leaving an estimated balance over the expenditures of 1838, of
$51,104 83.
The main portion of this balance will be paid over to the Fund
Commissioners, under the act of last session, to be applied to the
payment of interest on the State loans.
The revenue due and payable at the Treasury since my last
annual report, has been paid into this department by the various
collecting officers, with the same promptitude which has been so
creditable to them for the several past years.
The nett amount of revenue of 1836, agreeably to the assess-
ment returns made to the Auditor of Public Accounts by the
different clerks, was $57,366 91.
It will be seen by this report that the amount of revenue of
that year, actually paid into the Treasury, is $60,541 88; exceed-
ing the assessment return $3,173 97, besides the amount of
$1,360 96 yet due from collectors, making in all, the amount of
$4,534 93 of revenue over the amount of assessments.
This fact, not only proves the faithful and assiduous discharge
of duty by collecting officers, but also, makes manifest the imper-
fect character of our revenue laws in reference to assessments, or
great carelessness and neglect in the officers having charge of that
duty.2
2 The State Auditor, in his report, estimated that in 1836, 300,000
acres of land had escaped taxation, and in 1837 nearly 600,000 acres.
Senate Journal, 1837-38, p. 58.
70 Wallace Papers
The amount of revenue lost to the Treasury annually, by
these partial and imperfect assessments, exceeds, no doubt, one-
tenth of the whole amount of the actual assessments.
This loss to the Treasury, together with the fact, that great
injustice is consequent upon such partial exactions from our citi-
zens, would seem to call aloud for such amendments to our reve-
nue laws, as will, in the future, obviate the difficulty complained
of. It is respectfully submitted to the General Assembly, whether
it would not be advisable to authorize triennial assessments ; sub-
jecting the several counties at each triennial year, to such thorough
and searching survey, by a principal and two assistant assessors,
as would insure a full and perfect assessment of all the property,
together with an equitable and uniform valuation of the same.
The additional expense may perhaps, be regarded as an objec-
tion ; but when it is considered that the expense of assessments for
the two years intervening the triennial assessments, would be much
less than at present, (the changes and transfers of property being
only necessary to be noted,) would make the aggregate expense
not much, if any, greater than at present.3
The amount of revenue of 1837, exclusive of that portion which
is directed by law to be paid over to the Fund Commissioners, will
probably be adequate to all the demands upon the Treasury the
coming year, including the deficit of the past year, and leave a
balance in the Treasury to be carried to the credit of 1839, of
about fourteen thousand dollars.
The rapidly increasing population and wealth of the State, has
swelled the amount of assessments considerably above what
had been anticipated, and which will bring into the Treasury a
corresponding increase of revenue.
It will be seen that the payments from the Treasury the present
year, exceed the current available means by the sum of $5,123 75.
This, with the amount of unaudited claims, supposed to amount
to about $12,000, will make an aggregate deficit at the com-
mencement of the financial year 1838 of $17,123 75.
3 There was no legislation on this subject at this session. No change
was made in the general tax law of the previous session that called for
a tax levy for state purposes of 15 cents on each $100 valuation of tax-
able property. Laivs of Indiana, 1836-37 (general), pp. 110-13.
Treasurer's Report, December 7 , 1837 71
There has been received from the United States on deposite,
the sum of $860,254 44.4 Of this amount, I have disbursed to
the loaning agents of the several counties, the sum of $567,126 16
— being the entire amount of the two first instalments, except the
sum of six thousand three hundred seventy-six dollars and eighty
cents, not called for by the counties, and which has been loaned
agreeably to law. The third instalment, being $286,751 48 has
been paid over to the Commissioners of the Sinking Fund, as was
directed in the event of the non-establishment of additional
branches of the State Bank. A statement and abstract of the con-
dition of this fund, and the operations of the several loaning
agents, will be made the subject of a separate communication.5
The operations of all the departments of the loan office, con-
tinue to manifest the admirable character of the laws which
govern their action.
The prompt payment of interest on loans, and the refunding
such loans as become due has been such the past year, that no
necessity has existed for advertising for delinquency in any case.
A large majority of the loans are now at nine per cent, inter-
est ; at which rate, although regarded high, applications are made
for loans far beyond the current accumulating amounts to be
loaned.
The expenditures on account of the State House will amount
the present year to about $2,500.
The main items of expense have been, continuation and com-
pleting the grade — shelving, carpeting, and furnishing the Library
rooms — carpeting the committee rooms — painting the fence —
repairing the roof, &c.
Among the payments under this head, have also been, for a
considerable amount of the expenses attendant upon the last session
of the General Assembly, left unprovided for in the specific appro-
priation bill, on account of a belief of the necessity of greater
scrutiny in reference to the claims presented.
4 This was the total amount of surplus revenue received by Indiana
from the Federal government. See Messages and Papers of Noah Noble,
485n, 486-87n, 587-88n and note 38, pp. 15n-16n above.
5 See the treasurer's report on the surplus revenue, December 18,
1837, printed below.
72 Wallace Papers
The roof of the State House, was greatly injured by a violent
tornado which occurred in May last, which took off a portion
of the zinc covering and otherwise injured the building, all of
which has been repaired; but it is doubtful whether the building
can be preserved, without an entire new roof ; the present one
having been from the first very deficient and imperfect.
A detailed statement of the various items of expenditure will
be shortly laid before the Legislature.
All of which is respectfully submitted.
N. B. Palmer, Treasurer of State
NO. 2. STATEMENT A— COLLEGE FUND.
REPORT of the Operations of the College Fund, from the 1st
December, 1836, to the 30th November, 1837.
RECEIPTS.
Cash on hand at last report $ 963 36
Received from William Alexander, Commissioner of
Reserved Township in Monroe county 1,577 92
Received from James Smith, Commissioner of Reserved
Township in Gibson county 383 00
Loans refunded 8,815 62
Interest on loans 3,802 37
15,542 27
CONTRA.
Amount of loans as per list accompanying $10,243 50
State Seminary, including incidental expenses 4,650 19
Cash on hand 648 58
15,542 27
Traesurer's Report, December 7 , 1837 73
STATEMENT B— SALINE FUND.
REPORT of the Operations of the Saline Fund, from the 1st
December 1836, to 30th November, 1837.
RECEIPTS.
Received from Andrew Wilson, Commissioner of Saline
Lands in Orange county $1,754 17
Received from Henry Young, Commissioner of Saline
Lands in Washington county 1,173 13
Received from Milton McPhetridge, Commissioner
Saline Lands in Monroe county 435 95
Loans refunded 1,720 00
Interest on loans 1,599 30
6,682 55
CONTRA.
Amount overloaned last year $ 77 67
Amount of loans as per list accompanying 6,140 00
Saline Fund expenses 263 42
Cash on hand 201 46
6,682 55
STATEMENT C—
CONGRESSIONAL TOWNSHIP FUND.
REPORT of the Operations of the Congressional Township
Fund, from the 1st December 1836, to 30th November 1837.
Received from School Commissioner, Ripley county $285 00
Interest on loan 99 00
384 00
CONTRA.
Amount overloaned last year $ 27 76
Amount paid School Commissioner of Ripley county 41 23
74 Wallace Papers
Incidental expenses 19 09
Cash on hand 295 92
384 00
Contingent Expenses from 1st December, 1836, to
30th November, 1837.
Paid C. Gordon, commission and storage of arms $ 12 00
Paid J. G. Clendenin, commission and storage of arms 10 37
Paid Henry Dooley, commission and storage of arms 23 00
Paid John Cain for postage 76 77
Paid John Myers for transportation and storage of arms 18 50
Paid Stacy & Williams Stationary for Secretary's
office 15 75
Paid D. W. Noe, services as Assistant Door-keeper of
Senate 13 50
Paid R. Schoonover, Transportation of Arms 7 75
Paid C. C. Palmer, for arranging archives of H. R 4 00
Paid Frederick Folts, painting signs for State House .... 76 00
Paid J. M. Moore & Co. for Stationary 5 38
Paid C. & J. Cox, for repairs on Governor's House 12 56
Paid John Cain, for postage 116 76
Paid Wm. Sheets, his expenses in attending the transfer
of the State Prison 32 00
Paid W. J. Brown, Stationary for Secretary's office .... 2 87
Paid Douglass & Noel for printing 31 84
Paid Black & Ball, Transportation of arms 16 75
Paid Landis & Morris, Stationary for Auditor's office 3 19
Paid S. C. Stevens, services in Saline Land Suit in
Dearborn county 50 00
Paid Bery Percell, Transportation of Arms 35 82
Paid L. W. Johnson, transportation of Public
Documents 7 20
Paid John Cain for Postage Ill 20
6 The list of borrowers from the college and saline funds is omitted.
Treasurer's Report, December 7 ' , 1837 75
Paid Wm. Tate, Transportation and Storage of Arms 27 22
Paid Underhill & Willets, for Gate Balls 2 04
Paid R. & V. C. Hanna, Stationary for Public Offices 14 87
Paid T. M. Smith, Stationary for Public Offices 5 00
Paid Samuel Wilson, Transportation of Arms 1 37
Paid Hazlett & Wilson, White Lead for Governor's
Circle 34 43
Paid W. Y. Wylie, Stationary for Secretary's office .... 14 31
Paid Frederick Folts, Signs for Offices of Auditor and
Secretary of State 6 00
Paid Seibert & Buehler, White Lead for Governor's
Circle 11 25
Paid J. B. Mix, Services in Geological Survey 5 00
Paid John Cain, for Postage 121 64
Paid W. J. Brown, transportation of Books for State
Library 15 75
Paid Jenison & Nourse, Binding Books for Auditor's
office 7 75
Paid John Matthews, Transportation 10 75
Paid H. Porter & Co. for Stationary 6 93
Paid Douglas Maguire, Governors' private Secretary 50 00
$1,017 52
7 The amount paid by the treasurer for stationery, transportation,
etc. is omitted.
76 Wallace Papers
President of State Bank: Annual Report1
[December 8, 1837]
To The General Assembly —
At their February session, the Directors of the State Bank
gave their assent to the amendments, which the last Legislature
proposed to the Charter, and recommended them to the immediate
attention of the branches. Eight of the branches also gave their
assent, but the other three have deferred doing so. The amend-
ments, therefore, have not taken effect.2
The inexpediency of creating new branches, under the circum-
stances, that have since occurred, is so apparent, that few are
disposed to object to the delay. But when the present difficulties
are removed, when specie payments shall be resumed, confidence
restored, and business return to its proper channels, that part of
the state which has not yet obtained its share of bank facilities,
may and should receive them. It was the unanimous expression
of the Directors at their late meeting, that at the earliest period,
circumstances shall justify, there ought to be three more branches
organized in the northern portion of the state.3
i Senate Journal, 1837-38, pp. 59-64; Documentary Journal, 1837-38,
No. [8]. Merrill sent another communication to the Senate on December
29 in reply to Senate resolutions asking for information on the estab-
lishment of additional branches of the State Bank and on the resumption
of specie payments. See below. The proceedings of the meetings of the
directors of the Bank are to be found in the papers of the State Bank
in the Archives Division, Indiana State Library. Beginning in 1838 the
proceedings were printed and are in the Indiana Division of the State
Library.
2 These amendments were embodied in an act approved February 6,
1837, regarding the distribution of the surplus revenue. Sec. 28 provided
that approximately $280,000 of this was to be paid over as stock in
branches of the State Bank. Sec. 30 made it the duty of the President
and Directors to locate not less than three nor more than four additional
branches at such time and place as they thought the public interest
required.
3 At a meeting of the directors in February, 1838, it was decided to
locate Branch No. 12 at South Bend, No. 13 at Michigan City, and No. 14
at Logansport. The branches were not to be organized until after the
resumption of specie payments. Printed Proceedings in Indiana State
Library. The Logansport branch was never opened. See below, 115.
Report on State Bank, December 8, 1837 77
No act of the State Board has ever impressed them with a
deeper sense of responsibility, than that, by which they advised
the branches to suspend specie payments. They were in session
on the 18th May last, when information reached them, that
nearly all the banks in the United States had closed their vaults.
The balances due this institution from other banks and their
paper then on hand amounted to $1,102,858 56. This sum would
have been totally unavailable, while specie payments were con-
tinued, and the bank must either have followed the example of
others, or permitted the brokers and banks of other states, the
first informed and most active in these matters, to drain it of
its specie, leaving the claims of the citizens of the state and the
large deposites of the General Government unpaid, until col-
lections of the notes and bills discounted could be made in specie
funds, and until other banks could be compelled to pay what
the public appeared to sustain them in refusing. If the collection
of the $5,311,804 97 then due the bank, for loans and for notes
and balances on other banks, had all been pressed at once, much of
it must have been sacrificed, many of our best citizens ruined,
and the industry and enterprise of the state, must have been
paralyzed for years. The stock subscribed by the state and indi-
viduals, might have been returned to them but little impaired,
but this would have poorly compensated for needless injury to
numbers of others. A sudden reduction of the circulating medium
of the state from about four millions of dollars, to less than one-
fourth that amount, must have occasioned the depreciation of
the value of property in about the same proportion. The sixteen
millions of dollars estimated to have been due, at that time by
the citizens of the state to the Bank, to the different loan offices,
to foreigners and to each other, would have been collected or
attempted to be, in a medium made, four times more valuable
than that, in which it was contracted.4
4 Both the House and Senate judiciary committees took under consid-
eration the bank's action in suspending specie payments. The House
committee, with Samuel Judah as chairman, was willing to exempt the
bank from forfeiture of its charter on condition that it would resume
specie payments and not suspend them again for longer than sixty days
in any one year. House Journal, 1837-38, pp. 173-76. The Senate com-
78 Wallace Papers
The course, which the State Board advised, not without hesi-
tation and reluctance, and which was adopted by the branches, has
since the suspension, paid off $761,920 13, of the debt to the
Government $288,085, of the notes in circulation, and $106,-
994 69, of the individual deposites, while the amount of specie
has decreased only $58,162 87, all of which has been applied to
paying off the debt to the U. States, and to supply change. Few
new debts have been contracted, the old debts have diminished
more than a fourth in amount; the paper of the bank is generally
taken at par; in reducing its discounts only one doubtfull debt
of $400, has been discovered, but one person, and he not now a
resident of the state, has sued on its paper, and no doubt can
exist in the mind of any intelligent citizen, but that specie pay-
ments can and will be resumed, whenever well-advised public
opinion shall demand it.
To this desirable result, the efforts of all the solvent banks in
the United States, are believed to be earnestly directed. They
are diminishing their discounts and circulation as rapidly as the
public good will permit, and in general, much more so than has
been here attempted. They have sent delegates to a Convention,
assembled to determine upon concert of action, and fix the time
for resuming specie payments. This bank has a Representative
there, instructed to vote for the earliest day that may be proposed.5
mittee divided, with Andrew Kennedy, a Democrat, submitting the ma-
jority report censuring the bank directors and Richard W. Thompson,
a Whig, presenting the minority report defending the directors. Senate
Journal, 1837-38, pp. 529-49. A resolution was introduced and passed
requiring the bank to resume specie payments thirty days after a general
resumption in other states. Laws of Indiana, 1837-38 (local), 442-43.
A special committee of the House, appointed to examine into the conduct
of the bank and its branches, made a lengthy report based on the
answers to thirty-eight interrogations sent to the various branches. It is
printed in House Journal, 1837-38, pp. 390-510.
5 Isaac Coe, one of the Fund Commissioners, was Indiana's repre-
sentative at the convention which was held in New York. He reported
on the proceedings in three letters to J. M. Ray, cashier of the State
Bank, and one to the president and directors. They are printed, together
with Merrill's comments, in House Journal, 1837-38, pp. 190-93, 815-26.
Specie payments were not resumed until August 13, 1838.
Report on State Bank, December 8, 1837 79
But in hastening the return of a sound currency, the State
Board have not felt at liberty to neglect other important interests.
At their late session they authorized an increase of discounts until
the first of June next, by which the branches may extend them
about $800,000, for the express and sole purpose of aiding the ex-
porters of produce. A previous gradual reduction had put it in the
power of several of the branches to afford some facilities for mak-
ing shipments, and all of them will now enlarge their discounts for
a time, to be reduced again by the avails of the produce exported.
The interests of the public and the bank in this particular, are
so important, that the operations of future years must be much
like those of the present season. As much more capital is required
from November to May than during the rest of the year, the
bank must, of necessity, reduce its discounts largely, in summer,
to be prepared to increase them again, when they can be used with
most advantage to community. It would appear therefore, that
the reduction, which the bank for its own security was forced to
make, when specie payments were suspended, has been required
not less by good policy to enable it to prepare for the present en-
largement. It will willingly, if necessary, make sacrifices in other
quarters, to sustain itself while thus aiding the business of the
country.
Though the bank, at its establishment, was by many considered
a doubtful experiment, and the subscription of the stock in most of
the branches obtained with difficulty, yet its business has hitherto
been successful almost beyond precedent. For this the Directors
of the branches are entitled to much of the credit. They have
made no bad loans ; they have profitted by exchanges of paper from
every part of the Union, by the collection of foreign debts, the
United States deposites, and the expenditures on the public works,
and the circulation of the paper has had no limits but those fixed
by the charter. The following abstract of the annexed table shows
the condition of the Bank on the 18th Nov. 1837, so far as
regards claims against it, viz:
80
Wallace Papers
Resources.
Bills discounted..$2,944,765 78
Bills of exchange 406,207 51
Banking houses .. 95,569 98
Furniture 5,427 96
Due from other
B'ks 460,520 51
Due from F'd
Com'rs 307,181 49
Remittances, &c. 39,316 08
Branch balances.. 31,458 87
Notes of other
Banks 140,084
Specie 1,128,031 56
Liabilities.
Notes in circula-
tion $2,226,695 00
Treasury U. S. .. 576,277 75
Due other banks 101,179 19
Sinking Fund .... 15,060 29
Unclaimed divi-
dends 4,598 63
School Fund 4,200
Pension Fund.... 5,817 75
Deposites 336,144 45
$5,558,563 74
$3,269,973 06
Leaving a balance of $2,288,590 68— which will pay $90,050,
the Nov. dividend — $2,200 the tax for the School Fund —
$1,867,906 25, the amount paid for stock— $20,283 75, the in-
terest on public deposites, and leave a surplus if there be no
losses, of $308,150 68, to be divided as profits hereafter.
The stock of the State in the Bank has been paid over as
follows :
In Nov. 1834 $500,000
In Nov. 1835 200,000
In Nov. 1836 165,000
In Nov. 1837 15,000 $880,000
On $865,000 of this sum, the state derived a clear profit the
last year of $29,250, over the interest of the loan by which that
stock was paid. The May dividend would have been larger but
for the uncertain prospects when specie payments were suspended.
The surplus fund now on hand will enable the branches to extend
their discounts farther than they could otherwise do, and will
secure dividends even when considerable losses occur.
Report on State Bank, December 8, 1837 81
It cannot reasonably be expected that the profits of the Bank
for some years to come, will equal those that have hitherto been
realized. The circulation and discounts must be less in propor-
tion to the capital than heretofore, seasons of depression will not
fail to come, for banks can no more expect perfect uniformity
and regularity in their business, than farmers can hope never to
suffer from drought or dearth, frost or inundation. But no state
of things is likely to occur, in which a clear profit of five per
cent, a year, after paying the interest of the loan in New York,
may not be made to the state on its stock in the Bank. At this
rate the profit in future will be $44,000 a year, which if loaned
out at eight per cent, clear of expenses, will, in less than thirteen
years with proper management, pay back the loan by which the
stock was purchased.
The third instalment in the Fort Wayne Branch has been
charged to the Sinking Fund, no loan having yet been made by the
state to meet the payment. An increase of Individual stock has
been made at the Lafayette Branch of $20,000. Several other
Branches had also contemplated the increase of their capital, but
finding that their stock was not in demand they have postponed
it for the present.
The charter now authorizes the capital of the Bank to be
enlarged as occasion shall require, to $3,000,000, and it will, no
doubt, be raised to this amount within a short time after the
present difficulties are removed.
The success of the Bank hitherto, arising from the prosperous
state of affairs generally, and not always requiring effort on the
part of its officers, may have had a tendency to permit its loans
to be used too often as permanent capital, and not in doing the
business of the country. This application of bank means is highly
objectionable on many accounts. Loans will be made, not as
independent transactions, but as matters of favor. Banks will be
created, not to lend but to borrow money, and not in reference
to the amount of business, but the number and clamor of bor-
rowers. The stockholders will be more interested in the loans
than the dividends, in distributing the capital than in securing
the profits.
82 Wallace Papers
Money loaned for business, will find limits in the extent of
that business. Employers, manufacturers, and exporters, who
borrow and expect to pay, when the transaction for which the loan
was made is completed, will seldom ask for more than they can
use with advantage to themselves and community. If the country
be prosperous, and public credit and confidence be general, the
business of the bank and country will expand to suit each other,
while under circumstances like the present, the sphere of action
for both will be kept within narrow bounds.
But there are no other limits, besides those of avarice and
ambition, to the desires of borrowers of capital for permanent
use. When times are good they will not pay, and they cannot
when they are otherwise. As directors and stockholders there can
be little security for their safe management, or that they will
obtain public favor by effecting public good.
Such is not the condition of a large majority of the Branches.
Those who choose, can at any time buy stock in the most of them.
In general the stockholders and directors are not improperly
favored. The loans made for business transactions are felt as a
benefit to the whole community, and the institution is considered
an honor and credit to the character of the State.
To insure a uniform and correct course, by the branches, of
applying the loans to the business of the country, the State Board
is taking decisive steps, and discounts will be limited in propor-
tion where suitable payments upon them do not provide funds
to keep up an active and healthy circulation of the paper.
Much of the business of banks is necessarily of a character,
which the Directors will neither have leisure nor disposition to
explain to every curious inquirer. It is not in their power to
accommodate, many, who come with fair claims and good security ;
and they are often beset by others who are clamorous just in
proportion to their want of merit. That many should be dis-
satisfied with their decisions, and having only partial views of
their motives should mistake them, is, perhaps, unavoidable. For
the allowances usually made to the imperfections of their nature,
those who manage banks may lay claim. But they neither ask
nor expect any thing further. They constitute a portion of a
Report on State Bank, December 8, 1837 83
community that is regulated by public opinion, and to that they
will submit without a murmur.6
The semi-annual examinations of the branches required by the
charter have been regularly made. Wherever improper proceed-
ings have occurred, they have been disapproved by the parent
Board. But in general, much has been found to approve and
little to condemn.
The Bank, as yet, has commenced but few suits, and it is under-
stood that no sales on executions have ever been made on its
account.
For months past, there have been loud complaints of pressure,
scarcity of money, and the difficulties of the times. Many of the
products of the country have fallen considerably in value, while
the prices of some articles are still high in proportion to others.
But these matters soon regulate themselves, though when a change
is unavoidable, if it be made early and amicably there need be no
interruption in the progress of business, especially in a country
like this. Those who accommodate themselves to the times will
not find them so bad but they can make good out of them. The
labor and rents of a country should be paid according to the
prices of its produce. If the former be too high, employment
cannot be furnished, if too low, labor will not be supplied. When
these bear a due proportion to each other, the farmer is encour-
aged to enterprize, and the laborer stimulated to exertion.
There would then appear to be no cause of serious alarm, in
the present state of things. Every prudent man has foreseen its
approach, and while the future was uncertain, his fears may have
6 In a letter to his brother on January 5, 1838, Merrill made this
comment regarding his relations with the legislature: "My situation has
been rather worse this winter so far, than it was some years ago when
Gov Ray and his party gave me a good deal of trouble. Every body
must have all about the Bank explained, and its charter must be amended
if possible so that it can neither do good or harm hereafter. How it
will result I cannot say. I am obliged to oppose plans, which in the
opinion of the prosperous are as wise as Solomon if alive would have
suggested. It is not unlikely that as my time is out next winter, the
falsehoods and the follies that are in circulation may prevent my re-
election. It will certainly be no object to keep the office if it be attended
with as much trouble as it has been the year past." Samuel Merrill
Papers, Indiana Historical Society Library.
84 Wallace Papers
predominated. But now the worst is known, and there is no
cause for despair, unless rashness and folly create new and un-
necessary difficulties.
The progress of the State in wealth and improvement need not
be long retarded. Those now in the lead may falter, but others
will soon take their place. No failures of consequence have
occurred among the business men. The suits for debt in the
courts are not more numerous than usual. Sheriff's sales seldom
occur. All the produce of the country is demanded for consump-
tion. Visionary schemes are understood and duly appreciated.
Emigration to the State is increasing. Canals and rail roads will
soon be completed. Confidence will be restored, and exchanges
be again at fair rates, and if produce do not command high prices,
its cost of transportation will be less, and the wants of the citizens
will be supplied from abroad at reduced rates.
Respectfully submitted on behalf of the Board.
S. Merrill, Pres't.
Wallace to the Senate: Nominations for Supreme Court1
Executive Department, Dec. 11th, 1837.
Gentlemen of the Senate:
Permit me to nominate to you as Judges of the Supreme Court,
for the next constitutional term, Isaac Blackford, Charles Dewey,
and Jeremiah Sullivan, Esqrs. and to ask your advice and consent
to their appointment.2 This term commences the 29th of January,
1838.
David Wallace
1 Senate Journal, 1837-38, p. 106.
2 Stephen C. Stevens, John T. McKinney, and Isaac Blackford had
been appointed judges of the Supreme Court in January, 1831, for seven-
year terms. Stevens resigned February 15, 1836, and was succeeded by
Charles Dewey; McKinney died March 4, 1837, and Jeremiah Sullivan
was appointed to fill that vacancy until the meeting of the legislature.
Messages and Papers of Noah Noble, 456-57, 540. The time was now
Report of Fund Commissioners, December 11, 1837 85
Fund Commissioners: Annual Report1
Office of the Board of Fund Commissioners,
Indianapolis, 11th Dec. 1837
To the General Assembly of Indiana:
The Board of Fund Commissioners in compliance with the duty
imposed upon them by law, now present to the General Assembly
a report of the loans negotiated since its last annual session, in
pursuance of the requisition of the Board of Internal Improvement.
On the 20th June last they negotiated a loan with Messrs.
Christmass, Livingston, Prime & Coster of the city of New York
for $30,000 — and between that time and the 1st October, they
negotiated loans of the Morris Canal and Banking Co. of Jersey
City, to the amount of $2,000,000; for which they contracted to
deliver transferrable certificates of stock bearing five per cent, in-
terest, dated July 1st, 1837, and payable in twenty-five years, at
the office of the Morris Canal and Banking Co., at Jersey City, or
at their agency in the city of New York; the whole of which were
delivered, except $500,000, which were not taken on the 4th
instant.
Of the stock thus sold, $430,000 were sold at par— $400,000
at 2 per cent, premium — 200,000 at 3 per cent, premium —
1,000,000 at 2 per cent, premium, and one half the profit which
may be made by the purchaser upon a re-sale, the aggregate
premium upon which is $ 34,000
Making the whole amount receivable upon the stock
sold 2,064,000
at hand for the selection of judges for a new seven-year term. Wallace
chose to continue the incumbents. The choice of Blackford and Dewey
received the unanimous consent of the Senate; the vote for Sullivan was
twenty-five in favor, twenty opposed. Senate Journal, 1837-38, pp. 106,
117. This accord between Governor Wallace and the Senate over the
appointment of Supreme Court judges is in marked contrast to the
conflict that was present in 1831 and was to arise again in 1845 when the
appointment of judges was made.
i Senate Journal, 1837-38, pp. 122-25, and Documentary Journal, 1837-
38, No. [30].
86 Wallace Papers
The premium on the whole, and the amount sold to
Messrs. Christmass, Livingston, Prime & Coster,
was paid for at the time of making the contracts,
amounting to 64,000
And the residue was made payable as follows, viz:
Oct. 1837 230,000
1st November 1837 350,000
1st December, 1837 120,000
On 1st Jan., February and March, 1838, each
$100,000 300,000
On 1st April, May, June, July, August and September,
1838, each $150,000 900,000
On 1st October, 1837 [1838] 100,000
$2,064,000
The whole amount drawing interest at the rate of 5 per cent,
per annum, from the date of the bonds drawn by the State.
$380,000 of the above stock were sold on account of the
Wabash & Erie Canal fund, and the residue upon account of the
Internal Improvement Fund. The sums heretofore due have been
promptly paid as the expenditures upon the public works re-
quired, and the balance will be drawn for according to the terms
of the contracts.
In consequence of the general suspension of specie payment by
the Banks during the last spring, and the consequent depreciation
of paper, it became necessary for the Board on the 1st July last,
to purchase specie for the payment of interest due upon that day
upon the State bonds previously sold, for which they paid a
premium of from 10 to 11 per cent. A refusal to have paid the
interest in specie would have endangered greatly the credit of the
State (hitherto so fair) and in all probability have prevented the
success of any negotiation for loans during the present season.
It cannot, however, be reasonably presumed that the necessity
of paying a premium for specie will long continue to exist, as we
have reason to hope that a resumption of specie payment by the
banks will, in a short time, become general.
Report of Fund Commissioners, December 11, 1837 87
Of the sum of $500,000 which was due from the Messers.
Cohens of Baltimore, for State bonds sold them in 1836, there
now remains a balance in their hands, which including interest
amounted on the 1st May last to $298,000, and which at this
time is not available. At the time the bonds were sold to the
Messers. Cohens, they were engaged in an extensive banking busi-
ness, possessed a very fair credit, and were regarded as safe as
any banking institution in the eastern cities. They also gave the
Messrs. Josephs, of the city of New York as security for the pay-
ment of the money due the State, who were also considered
entirely responsible for the amount of bonds sold. The drafts
drawn upon them by the Board were promptly paid, until, some-
time during last spring, when they suspended business, and refused
further payments — the consequence resulting from the extensive
pressure and general commercial embarrassment of the country,
together with the previous failure of their securities.
Upon the receipt of the intelligence of the failure of the securi-
ties and the consequent embarrassment of the Messrs. Cohens, one
of the members of the Board proceeded to Baltimore for the pur-
pose of making arrangements to secure the amount due the State,
and succeeded in securing assignments of the bonds of the Win-
chester & Potomac Rail Road Co. for $44,000, payable 1st of
May next, and bearing 6 per cent, interest ; also stocks of the
Baltimore & Ohio Rail Road Co., and of the Baltimore & Sus-
quehanna Rail Road Co. on which had been paid the sum of
$78,880, and also an assignment of the interest of the Messrs.
Cohens, in an attachment upon which the sum of $25,000 will
probably be realized. He also received a deed for three hundred
and eighty-four lots on the Hudson river in the city of New York,
upon which there is a mortgage for $65,000, payable some time
in the year 1839, the lots are generally estimated to be of a value
greatly exceeding the amount of the mortgage, but the Board is
not able to say what amount could be realized from them. The
Stocks and property were transferred as collateral security to the
State.
The Board during the last summer commenced a suit against
the Messrs. Josephs, in the city of New York, which is still pend-
Wallace Papers
ing. During the month of September, after suit was commenced
against them, they executed to one of the Board, in trust for
the State, a deed for forty-eight lots in Brooklin, opposite the city
of New York, and one hundred and eighty-two lots in the city of
New York, which are estimated to be worth about $150,000, but
which are subject to a mortgage of about $47,000. They have
also assigned a mortgage upon property in Poughkeepsie for
$30,000, but this property having been before sold under a mort-
gage previously executed, will require about $11,000 for its
redemption. These deeds have been placed in the hands of a third
person as escrows, to be returned if the Messrs. Josephs are not,
within ninety days, released from their liability upon their bond
to the State as security for the Messrs. Cohens. The Messrs.
Cohens have also proposed to secure the further sum of $65,000
if a release is executed to them.
The Board not considering themselves invested with power
by law to compromise any claim of the State, or to execute a
release to any of its debtors without full payment in money, have
refused to close any arrangement with either the Messrs. Cohens
or Josephs, which shall release them from their liability to the
State. They now present the subject to the General Assembly
and would respectfully suggest the propriety of passing a law
authorizing the board to compromise with the Messrs. Cohens &
Josephs, and to execute a release to them upon the best terms they
may be able to obtain ; and to secure as far as practicable the
interest of the State. Should this course be deemed advisable by
the Legislature, it will be necessary, also, to give the Board power
to pay off any incumbrances, taxes, or other claims due upon any
property which may be transferred ; and also to rent or sell the
same as they may deem advisable, and to pay any installments
which may be requisite upon stocks assigned. The Board confi-
dently entertain the opinion that should the arrangement proposed
be acceded to, it will ultimately secure the State against any loss.
An early action upon this subject would be desirable, as the time
within which the Board have the option of concluding the arrange-
ment will shortly expire.2
2 An act was passed and approved on January 14, 1838, giving the
Report of Fund Commissioners, December 11, 1837 89
Deeply impressed with the importance of providing means to
pay the interest accruing upon the State bonds without resorting
to taxation to such an extent as may give room for complaint,
the Board would respectfully recommend the creation of a sinking
fund to aid in the payment of the interest and the gradual redemp-
tion of the principal. For the purpose of effecting this object, the
premiums which have been received upon the state bonds hereto-
fore sold, and those which may be hereafter received upon subse-
quent sales, together with such funds as the legislature may think
proper to apply for that purpose may be placed in the hands of
the Sinking Fund Commissioners already appointed, to be by
them loaned out at a rate of interest to be prescribed by law, and
the accumulating interest to be again loaned until the fund shall
reach an amount to be designated by the Legislature.3
During the present year, the Board have issued bonds of the
State to the Lawrenceburgh & Indianapolis Rail Road Company
to the amount of $121,000, which makes the whole amount issued
to the company $221,000. The law authorizing the issuing of
the State bonds to the Company, requires the payment of the
interest accruing upon them, by the Company, at some one of the
Branches of the State Bank of Indiana. The interest of the bonds
is payable at New York, and should the company pay the amount
at either of the Banks in this State, the state must incur a loss
on the exchange necessary to procure eastern funds. They would
therefore suggest the propriety of requiring the Company to fur-
nish at New York such funds as will be necessary to pay the
interest.
The law above referred to gives the Board no authority to pay
the interest accruing upon the bonds in the event of the Company
failing to make the payments, and as it is necessary for the credit
Fund Commissioners the authority requested. Revised Laws of Indiana,
1837, p. 356.
3 A resolution was offered in the House, instructing the committee
on canals and internal improvements to inquire into the expediency of
creating a sinking fund as suggested here. Provision for such a fund
may have been included in one of the several bills introduced by that
committee, but their contents are not set out. It was not included in any
legislation that was enacted. House Journal, 1837-38, p. 77.
90 Wallace Papers
of the State that the interest should be punctually paid ; this
power should be given them.
An account of disbursement of money during the present year,
together with a detail of the situation and state of the fund, is
necessarily deferred to a future report after settlement with the
Board of Internal Improvement.4
Respectfully submitted,
Sam'l Hanna, 1 Fund
Caleb B. Smith C Com'rs
Fund Commissioners : Reply to House Resolution1
Office of Board of Fund Commissioners
Indianapolis, Dec. 14th, 1837.
Hon. Thos. J. Evans, Speaker of the House of Representatives.
The Board of Fund Commissioners in compliance with a reso-
lution of the House of Representatives adopted on the 11th inst.
present the following Statement : The State Debt created for
purposes of Internal Improvement as follows, viz:
For Wabash and Erie Canal 1,327,000
Internal Improvement under the act approved
Jan. 27, 1836 2,500,000
Making in all $3,827,000
Of the above amount $100,000 loaned for the prosecution of the
Wabash and Erie Canal, was contracted for at the rate of 6 per
cent, interest and the residue at the rate of 5 per cent.
The funds which have been received in payment for state bonds
sold have been to a small amount, the notes of some of the banks
4 Another report of the Fund Commissioners, giving financial statistics,
was submitted to the General Assembly on February 6, 1838. It is
printed in the Senate Journal, 1837-38, pp. 642-47, and in Documentary
Journal, 1837-38, No. [16]. See also the statement of the Fund Cc —
missioners, presented to the House of Representatives, below.
.om-
l Documentary Journal, 1837-38, No. [13].
Fund Commissioners to House , December 14, 1837 91
of the city of New York, and the residue has been paid upon drafts
of the Fund Commissioners in favor of the Banks of this State.
The Board in the contracts which were made during the present
year for the sale of the state bonds, made no stipulation as to the
kind of funds to be received, leaving themselves at liberty to
demand such funds as could be used in the prosecution of the
Public Works without loss or sacrifice to the state. The payments
which have been already made, were made to the several banks of
this State, in such funds, as were acceptable to them.
All the Internal Improvement funds of the state, which have
not been drawn by the Board, are deposited with the Messrs.
Cohens of Baltimore, and with the Morris Canal and Banking
Co., at their agency in the city of New York.
The interest heretofore paid upon the state bonds, has been
paid out of the Wabash and Erie Canal fund and the Internal
Improvement fund which funds consist of the amount received
upon the sale of the state bonds, the amount received upon the
sale of canal bonds [lands], the interest upon the money on
deposite, interest on canal funds and the premium received upon
the sale of drafts upon the fund in New York, no specific fund
having been designated by law out of which the interest should be
paid.
The amount of premium which has been received upon bonds
sold, and interest received upon canal funds, and upon funds
deposited in eastern banks exceeds the amount of interest which
has been paid upon the state bonds, as the following statement
will show. There has been
received as premiums upon the bonds sold and upon
drafts 76,703 37
Interest upon canal lands 53,329 57
Interest upon monies deposited in banks in eastern
cities 56,473 35
$186,506 29
And there has been paid out for interest upon State
bonds $155,877 32
92 Wallace Papers
The Board has never paid any premium to procure funds to
pay the interest upon the state bonds until the present year, when
in consequence of the suspension of specie payment by the banks,
it became necessary to pay a premium for specie; the premium
paid was 10^ per cent, and the aggregate amount was $3,649 43.
For the last two years no money has been drawn for the con-
struction of the several public works, except through the medium
of the branches of the State Bank, which contracted to disburse
the money at any point upon the line of the public works desig-
nated by the several acting Commissioners, and were paid drafts
of the Fund Commissioners on the funds deposited at the East.
At the last annual meeting of the Board at this place, they
made an arrangement with such of the branches as would agree
to disburse upon the public works, to pay them by drafts payable
thirty days from the end of each month in which the money was
paid out.
By this arrangement (which was at that time the best that
could be made) , the funds of the state were left on deposite at
interest from 30 to 60 days after the contractors were paid, by
which ^2 to 1 per cent, was saved to the fund, and the profits
on the drafts given to the banks as an equivalent for the time they
lost the use of the money, the risk and expense of sending it upon
the line of the public works and paying the contractors.
The arrangement made with the Banks does not continue longer
than the present year, and it is not designed by the Board to con-
tinue it longer upon the same terms, as bills on New York since
the last annual meeting of the Board, have, in consequence of the
suspension of specie payments, increased in value from 1 to 3
per cent.
The money paid out by the Banks in this State, as far as the
Board has ascertained, has been the current funds of the country,
and such as the Banks paying the same, received at the time on
deposite. A large portion of it was the paper of the banks of this
state, but in some instances where there were heavy payments to
be made, some of the banks were compelled to pay out the paper
of other banks, not having a sufficient amount of their own paper
to meet the demand at the time.
Report of Internal Improvement Board, December 15, 1837 93
It would be difficult for the Board to state the difference
between the value of the funds paid out by the banks upon the
public works and specie, as their relative value is very much
varied by circumstances. Previous to the suspension of specie pay-
ment by the banks the value of each was the same, and since the
suspension, the paper of the banks has answered all the purposes
of the operator upon the public works as well as the specie,
although when specie has been desired for the purpose of pur-
chasing public lands, it has been sold at a premium of from 5 to 10
per cent.
Sam'l. Hanna,
Caleb B. Smith,
Fund Commissioners.
State Board of Internal Improvement: Annual Report1
Office of State Board Internal Improvement,
Indianapolis, Dec. 15, 1837.
Hon. David Hillis, President of the Senate:
Sir — Herewith is transmitted the second annual Report of the
State Board of Internal Improvement to the General Assembly.
Very respectfully,
D. H. Maxwell, Pres't of the Board
[Enclosure]
To the General Assembly of Indiana:
Since the annual report of this Board, made to the General
Assembly in December last,2 but few original orders have been
made to put any additional portions of the public works under
contract. The high price of labor, and the unpromising appear-
1 Senate Journal, 1837-38, pp. 180-91; Documentary Journal, 1837-38,
No. [16].
2 The first annual report of the internal improvement board is in
Senate Journal, 1836-37, pp. 131-43; the engineer's report for 1836 is in
ibid., 144-77.
94 Wallace Papers
ance of the reduction of it for the current year, admonished the
Board to abstain from any extension as much as possible, and they
yielded to this caution, under a belief that the system and the
public interest, would sustain no injury from the temporary delay.
If by the ensuing spring, proper efforts shall be made to introduce
labor into the State, and prices should settle down upon a salutary
basis, the public works can then be greatly extended, and their
prosecution pushed with alacrity and expedition. At the late and
present prices for labor, the domestic supply might be deemed
sufficient for that object even now, but beside the objection, that
they are exorbitant, and far above what other States have given
for similar services, there is another which in the opinion of
the Board is entitled to as much weight, predicated upon the
present condition and prospective resources of the State.3 It will
be admitted that there is no surplus labor in the State, but that
her policy demands an increase of it for agricultural purposes, as
a vast extent of her fertile territory remains unoccupied, the
improvement and cultivation of which would greatly increase the
general prosperity, and multiply in the same proportion her own
resources.
By affording an undue stimulus to labor on the public works,
we throw out an allurement to our citizens, who are in one way
or another identified with the agricultural interest, to abandon
it; the hope of greater gain successfully invites them from the
pursuit to which they have been raised, and for which they are
well qualified by habits and experience, to adopt one for which
they are comparatively unqualified. Individually they are not per-
manently benefitted by the exchange, and to the State, in her
prosperity, wealth, and financial means, it works a vital injury.
The great benefit accruing to the farmer, from a system of
Internal Improvements, is in the enhanced value of his land, and
in good prices and a steady market ; and whilst extending his
improvements and adding to his possessions, he should not be led
astray by anticipations of high wages, or splendid contracts in
3 The engineer's report for 1837 states there was a labor force of
4,666 employed on the various lines of improvement, 2,435 of whom
were estimated to be Europeans. Senate Journal, 1837-38, p. 249.
Report of Internal Improvement Board, December 15, 1837 95
the public service, but the effort should at least be made, to keep
labor there as nearly as possible down to the wonted level in
other employments. Should this be consummated, the complaints
of the last season in some parts of the State, will not be repeated,
that the ordinary farming operations of the country, could not
be kept up, in consequence of the competition for labor on the
public works. These are some of the considerations which had a
controlling influence upon the Board, and they were carried out
to a considerable extent, by their declining to put a large propor-
tion of the work under contract, authorized by the original
orders of the Board at their first meeting. By making these re-
marks the Board must not be suspected of being in favor of a
policy which has not heretofore characterized their proceedings;
the idea is emphatically repudiated.4 On the contrary, it is their
determination, unless prevented by the action of the General As-
sembly to extend operations as fast as a force properly applicable
to them can be acquired, which can be ascertained and regulated
by a judicious limit in the estimates of the Engineers to be here-
after made, preparatory to the lettings. The Board have undimin-
ished confidence in the report made by them at the last session of
the General Assembly, upon the resources, and ability of the
State to meet the engagements of the system ; and although since
that time the elements in the calculation have somewhat varied,
the falling off in any one instance is more than counterbalanced
by a gain in some other. They do, now as then, look to the prose-
cution of the works where commenced, and a further extension
of them along the respective lines. The system sprang from the
reciprocal confidence, harmonious understanding and co-operation
of the different sections of the state; all have started in the prac-
tical consummation of the splendid enterprize; the march of all
should be onward, and be the event what it may, the struggle
should be one and undivided in a common cause.
The Board have the satisfaction to inform the General Assem-
bly, that the progress of the works under contract, has been active
4 Recalling that the principal issue in the recent gubernatorial con-
test was the classification of the public works, the board apparently
wanted to make it clear that their failure to get the work going on all
lines did not mean they were in favor of classification.
96 Wallace Papers
and efficient, and equals the expectation entertained in relation
to them at the commencement of the season. The division of the
Wabash and Erie Canal, which lies between Fort Wayne and the
Ohio line, is under construction, and the work will be kept up
with unremitting exertion, with a view to its speedy completion,
by which time it is expected that the part of the said canal, within
the boundary of Ohio will also be completed ; the whole of which
from the State line to Maumee Bay, is now under contract. The
Board are constrained to say, that they cannot speak in terms of
commendation of the course pursued by the public authorities of
the State of Ohio, in all respects, relative to this portion of the
Wabash and Erie Canal. Owing to the extensive commerce which
will be carried on between Fort Wayne and the point at which
the canal will disembogue into the Maumee, this portion of it
being the recipient of trade for the Wabash and Erie canal, the
Central canal, the Erie and Michigan canal, and the Miami or
Dayton canal, this Board ordered the division from Fort Wayne
to the Ohio line, to be constructed sixty feet wide and six feet
deep, not doubting that Ohio would unite in a similar construc-
tion from the line to Toledo. This has not been done except from
the point of junction of the Dayton with the Wabash and Erie
canal, which is about sixteen miles from the State line, leaving
the intermediate portion to be constructed the ordinary width
only. It will be perceived that by this arrangement of Ohio, she
will fully accommodate the navigation upon the Dayton canal,
whilst a similar benefit is invidiously denied to Indiana, a hard-
ship much magnified by the consideration, that the canal lands
transferred by Indiana to Ohio, she was not compelled to dispose
of until recently, when they commanded high prices, whilst the
former, to comply with the compact on her part, has had to sell
continuously from an early day, however unpropitious the market.
It is anticipated, that when this subject is brought to the notice of
the Legislature of Ohio, by the General Assembly of this State,
she will not hesitate to satisfy our just expectations.5
•"> A memorial and joint resolution were adopted by the legislature
requesting the state of Ohio to extend the canal width to sixty feet on all
that portion between the Indiana-Ohio line and Lake Erie. Laws of
Indiana, 1836-37 (local), 443-44.
Report of Internal Improvement Board, December 15, 1837 97
From Fort Wayne to Logansport the canal may be considered
as completed, and in the spring will be navigable the entire route;
and from the latter place to Lafayette it will doubtless be in all
respects finished contemporaneously with the division East of
Fort Wayne. Whilst on this branch of the system, the Board will
remark, that they regret to learn, that some intimations have been
publicly given, by ill-advised individuals, that the Wabash and
Erie canal will be stopped at Lafayette. They conceive it due to
themselves, and more especially to the country South and North
of that point, to disclaim having in the remotest degree, given
encouragement to such an opinion. So far from it, that they are
well satisfied that the object in view at the time, when the con-
struction of that canal was originally determined on, can never
be effected except by the entire extension of it as now established
and expressly directed by law. In connection with this great work,
has arisen an important question of intense interest to this State,
the settlement of which in accordance with the views of the Board,
and of which they can have but little doubt, will add a vivifying
influence to the general system, and may lead to such an extension
of it, as will afford that most general accommodation, so much
desired.
The act of Congress appropriating lands for the use of the
State, to aid her in the construction of the Wabash and Erie
canal, is predicated upon the understanding, so expressed, that
the canal shall extend from the navigable waters of the Maumee
of the Lake, to those of the Wabash. The object of both parties
was, as it appears to have been, to effect a good, permanent navi-
gation from Lake Erie through the Maumee and Wabash rivers
to the Mississippi, to be enjoyed by the General Government free
of toll or other charge, in consideration of the grant made by her.
In the first place, the mouth of Tippecanoe river was supposed to
be the proper terminating point upon the Wabash, but subse-
quently it was deemed expedient, indeed necessary to the con-
summation of the object of the parties, to continue the Wabash
and Erie canal to Terre-Haute, at which point it now terminates
and disembogues into the river. On that part of the canal within
the borders of Ohio, the terminating point on the Maumee was
98 Wallace Papers
at first established at the Rapids, the Engineer reporting at the
same time, that it was unnecessary under the provisions of the act
of Congress, or to protect the public interest, to extend it fur-
ther down said river. But subsequently, and after a lapse of eight
years, under the authority of the Board of public works of that
state, the canal was extended from that point to the Maumee
Bay, a distance of fifteen miles, and an extension of the grant
claimed for the State in proportion to the extension of the canal,
in virtue of the same act of Congress. The claim was submitted
to the Commissioner of the General Land Office at Washington,
examined, duly considered and allowed by him. In behalf of the
State of Indiana, this Board has preferred her claim for a quantity
of land in proportion to her extension of the same canal upon the
Wabash, and as the cases are so strikingly analogous, they cannot
permit themselves to believe that the Commissioner of the General
Land Office will reject it.6 To do so would be a species of
favoritism subversive of principle, an unprecedented departure
from good faith, and the existing hesitancy on the part of the
Commissioner of the General Land Office can only be accounted
for by the importance and comparative magnitude of the claim. . . .
On the Erie and Michigan Canal, the Board in December
last, ordered a portion of the work to be put under contract ; but
at their sitting in September following, countermanded that order,
in consideration of the necessity of increased vigorous operations
on the Wabash and Erie canal. The Board regret that the ex-
pectations raised by them in that section of the country, have
not been realized, but trust that it will be seen that they were
constrained by an imperious duty to postpone the work. The
faith of the State being absolutely pledged for the construction of
that Canal, the Board then thought that no injury could accrue
to that important interest by a short delay of operations, until the
6 A joint resolution was passed requesting Indiana's representatives
in Congress and instructing her senators to visit the proper departments
in Washington and urge Indiana's claims to additional land for the
extension of the canal to Terre Haute. Laivs of Indiana, 1837-38 (local),
451. The letter of the Board of Internal Improvement to the General
Land Office is printed in the Senate Journal, 1837-38, pp. 193-96. For
the reaction of the Land Office to the request, see James Whitcomb to
Governor Wallace, July 26, 1838, below.
Report of Internal Improvement Board, December 15, 1837 99
force engaged on the contiguous work, could in part be spared
and transferred to it; but they now consider it probable, that
the order will be revived, at an earlier day, than was then
anticipated.
On the Cross-Cut canal, twenty-six sections have been under
construction, including the feeder dam on Eel river, and one
Lock. On the southern division of the Central canal, thirty-nine
sections have been under construction, including the feeder dam on
Big Pigeon and two locks. On the Indianapolis division, fifty sec-
tions have been under construction, including the feeder dam on
White river above Indianapolis, and eleven locks. On the White
Water canal, sixty-one sections have been under construction, three
feeder dams and 18 locks, and upon these divisions generally a
large proportion of the work has been done. . . . The Board
authorised in all 180 miles of canal to be put under contract, but
128 miles only have been let, owing to the cause heretofore men-
tioned; and the sections retained being in some instances the light
work on their respective division.
On the roads also, with one exception, considerable progress
has been made. On the Madison and Lafayette rail road, of the
twenty-three miles put under contract, extending from Madison
to the Greensburgh road near Vernon, fifteen have been finished,
and are in a state of preparation to receive the superstructure;
and by the first of September next the balance will be in the same
forwardness. The Acting Commissioner on this line, has made
an arrangement with a mercantile house in New York, for the
importation of rail road iron, for the use of the state, as it may
be wanted ; and by May next, he expects to receive the supply
that will be needed by him the ensuing season. It is doubtless
known to the Legislature, that the domestic article is seldom, if
ever, used for this purpose, as the cost of the material simply,
would exceed that of iron imported, which comes free of duty,
manufactured in proper shape, and prepared for immediate use.
The cost per ton when delivered at Madison will probably not
exceed eighty dollars.7
7 The iron rails used on the portion of the railroad built by the
state were purchased in Wales and shipped by way of the Mississippi
100 Wallace Papers
On the New Albany and Vincennes McAdamized road, the
grading, culverts and bridges are nearly completed, from New
Albany to Paoli, a distance of 41 miles; and early in the next
season the application of metal will be commenced. On the
Jeffersonville and Crawfordsville road, the work has been put
under contract from Jeffersonville to New Albany, and the grub-
bing of about 4 miles which is alike applicable to a rail or Mc-
Adamized road in the interior, between the Cumberland road and
Greencastle. This road has been the source of some trouble to
the Board, but in accepting the trust tendered to them, they did
not expect to be exempt from it. The path of official duty is ever
beset with difficulties, and he who travels it must meet them; but
if he moves on with honest purpose and as circumstances will
permit, fears would be gratuitous, if not despicable. Impressed
with this truth, and disclaiming the intention to cast censure any
where, although the principle of self-defence might seem to justify
it, the Board approach the subject of this road with confidence,
and respectfully submit the following statement of their pro-
gressive action upon it. The act of the General Assembly declares,
that the road shall be a rail road if practicable, and if not, that
it shall be constructed upon the M'Adam principle; a qualification
no doubt originating in the fact, that upon the first attempt to
examine and survey the route by an engineer in the service of
the State, before the organization of this Board, a rail road was
pronounced "impracticable."
At the first meeting of the Board, in March 1836, the Acting
Commissioner to whom that line was confided, was instructed to
have the preliminary examination and survey made, as soon as a
competent Engineer could be had ; and at the same time, to
expedite that and other branches of the service, the Board ap-
pointed a committee to visit those states in which Internal Im-
provements had been extensively carried on to procure a supply
of Engineers, and more especially, a proper person to fill the
office of Principal Engineer on roads. At the meeting of the Board
in May afterwards, the Board still found themselves without a
and Ohio rivers. C. G. Sappington, "The Madison and Indianapolis
Railroad," in Indiana Magazine of History, 12(1916) :236-42.
Report of Internal Improvement Board, December 15, 1837 101
principal Engineer on roads, or a supply of engineers of other
grades, but arrangements for them were under progress, and the
Board were satisfied that every means had been diligently availed
of to secure them, but if possible to give further efficacy to their
views, in relation to the Principal Engineer on roads, the impor-
tance of such an officer, and the want of him at that time being
most sensibly felt, full latitude was given to the President of the
Board, to make the appointment himself in vacation, leaving the
selection and salary both discretionary with him.
At the meeting of the Board in October following, the president
had succeeded in obtaining a principal Engineer, one who had
been recommended to him for the situation, by gentlemen of
the highest rank and merit in their profession as Engineers, and
the Board were unanimous in their congratulations, upon what
they deemed the fortunate issue of their persevering efforts.8 At
the same meeting, the Acting Commissioner on the Jeffersonville
and Crawfordsville road, presented a report from his resident
Engineer, of an examination of the route as far as the West Fork
of White river, and a reconnoisance on a further part of it, in
which he expressed his opinion in favor of the practicability of a
rail road route.9 The Board however, after mature reflec-
tion, the subject having been repeatedly discussed, came to the
conclusion not to settle the character of the road upon this unfin-
ished survey alone. The Engineer alluded to, however qualified
in other respects, had not sufficient experience in his profession
to warrant the Board in coming to a final decision, upon the
exposition furnished by him, and besides the Board had then a
principal engineer on roads, whose especial province it was, to
decide upon matters of such magnitude. The report was accord-
ingly submitted to him, but he declined to give any intimation to
the Board in favor of its adoption, and this at a time when he
could not be suspected of being under prejudice or other sinister
influence. The principal Engineer was then directed to make his
examination of the route as soon as practicable, and submit a
8 The principal engineer on roads was H. M. Pettit.
9 The resident engineer was Robert H. Fauntleroy, of New Harmony,
a nephew of Robert Dale and David Dale Owen.
102 Wallace Papers
report to the Board, and in the mean time the Acting Commis-
sioner was instructed, to put a part of the work under contract,
so that it might answer for either a McAdamized or rail road,
as the Board should finally determine.
In June following, the principal Engineer on roads made his
report, couched in strong terms against the practicability of a
rail road ; his examination covering only a part of the route, but
enough to satisfy him ; it not being necessary in all cases to examine
an entire route, for evidences of impracticability. The word
"practicable" in the law has not of course received a strict con-
struction from the Board, but they deem the qualification in the
law, as giving the discretionary power to decide upon the com-
parative expediency of a rail road, for had the intention of the
General Assembly been otherwise, no such qualification would
have been inserted, as it is strictly practicable to make a rail road
any where. This report however, was not followed by any distinct
expressions of the Board, settling the character of the road, none
such being moved for by any member ; but on the day succeeding
the presentation of the report, on the motion of the Acting Com-
missioner on that line, he was unanimously authorized, to put
certain portions of it under contract, to be constructed at an eleva-
tion indicating a McAdamized road, although not nominally
expressed. But had he submitted a resolution, declaring in the
plainest terms that the road should be a McAdamized one, the
Board would not have hesitated to adopt it, believing, as they then
did, that the report of the principal Engineer was entitled to their
confidence. The members of the Board are not Engineers, nor
are they selected for their qualifications as such; and although in
the discharge of their duties, much may be acquired by them in
that line, yet to a great extent, they will always have to depend
upon the statements of the Engineers employed by them. Some
of those necessarily engaged in the service of the state are wanting
in experience, although it is believed that in the end, the state will
feel a pride in having patronized them; and it was partially to
avoid the evils, which might grow out of this circumstance, that
it was deemed necessary to procure a principal for each depart-
ment of the service, who had established a high reputation in his
Report of Internal Improvement Board, December 15, 1837 103
profession. To such an officer great respect is due, and his official
statements should not be set aside, but upon evidence, clear and
indubitable. To hold a different opinion, would be to disregard
system and responsibility in the service, and to trample under foot
that rank which the Board, had themselves, created, as the proper
distinction of superior attainments.
The action of the Board upon the report as here stated, seemed
to produce much dissatisfaction ; for in a few weeks afterwards,
they were convened by the President, to take this subject again
under consideration ; and a delegation composed of some of the
most respectable citizens of the State, appeared before them to
represent the wishes of the people locally interested. That portion
of the statement made by them to the board, which more especially
claimed their attention, was the charge of inconsistency in the
reports made by the principal engineer on roads, in relation to
certain principles assumed by him at different times, and that in
his report upon the Jeffersonville and Crawfordsville road, he
had greatly exaggerated the cost. The officer whose conduct was
thus assailed, being no longer in the service of the State, or
present, the Board were precluded from his explanations, which
might possibly have reconciled these alleged incongruities. — Under
these circumstances, to have absolutely adhered to his report, in
defiance of the complaint made, would have been an indecency
towards public sentiment, and on the other hand, to have retro-
graded to the original report, and upon that basis decided upon
the character of the road, was entirely inadmissible. It would
have placed the Board in a ridiculous attitude, and justly exposed
them to heavy censure. To have yielded to the wishes of the
delegates would certainly have been gratifying to them, but it was
evident that the Board and the delegates occupied different
grounds, productive of different opinions. The delegates were
bound to represent that portion of the people, who had urged
and sent them upon that mission. They could not virtually act
in that capacity, without doing so ; but the members of the board
were the agents of the General Assembly, to carry into execution
their law, with an eye single to the interest of the whole people
of the State. With a full view of the emergency, and to put the
104 Wallace Papers
Board in possession of the best lights for a final decision upon
the conflicting reports and statements made, they appointed Mr.
Williams, then Principal Engineer on Canals, the Principal
Engineer of the State, to have in charge for the present, all the
public works, and directed him to invite from some neighboring
State, two engineers distinguished for their ability and experience,
to unite with him in a personal examination of the said route,
and make their joint report to the Board at as early a day as
practicable; — a mode of settling such difficulties sanctioned by the
usage of other States. Mr. Williams has succeeded in obtaining
for this service, Mr. Welsh, the Principal Engineer of Kentucky,
and Mr. Forrer of Ohio, than whom a better selection could not
be made, all of whom are now engaged on the route, and when
their report is submitted to the board, which will be, by the 25th
of this month, no time will be lost in deciding upon this question,
and as far as the Board is concerned, putting it to rest forever.10
The Board indulge the hope, that the General Assembly will per-
ceive, that there has been no unnecessary delay on their part, in
bringing this matter to a close, upon proper premises; but that
from first to last, it has received from the Board the attention
due to its importance. It is very possible they may have erred
and come short of their duty, but upon a review of the various
steps taken by them in relation to it, they can perceive nothing to
reproach themselves with.
On the roads inclusive, the board have ordered 84 miles to be
put under contract, but 68 only have been let.
Another work which it is their duty to introduce to the notice
of the General Assembly at this time, is at the Grand Rapids of
the Wabash, for the improvement of the navigation of the river.
By the act of the General Assembly, the board were required to
attend to the execution of a proposed compact between this State
and that of Illinois, upon the subject of the improvement of the
1° The reports of the various surveys are in the Senate Journal;
those of R. H. Fauntleroy, pp. 364-74, 388-91; of H. M. Pettit, 375-78;
of J. L. Williams, Sylvester Welch, and Samuel Forrer, 348-62. The
General Assembly decided to build a macadamized road rather than a
railroad between Jeffersonville and Crawfordsville. Revised Laivs of
Indiana, 1837, p. 354.
Report of Internal Improvement Board, December 15, 1837 105
navigation of that river, from Vincennes to its mouth ; and this
object was consummated in April, by Mr. Blake the Acting Com-
missioner appointed by this board, and Gen. M. K. Alexander,
the Commissioner appointed by the Board of Public Works of
Illinois. Immediately consequent upon which, they put measures
in a train for the commencement and continuous progress of oper-
ations; and after a thorough examination by themselves personally,
and a corps of engineers organized for the purpose determined for
the present to concentrate their efforts at that point of the river
well known as the Grand Rapids.11 The obstructions at this
point commence and continue from Little Rock to the foot of the
rapids, just above the mouth of White river; making a distance of
10 miles, and a fall of 10 feet, and have ever been considered,
as they have certainly proved to be, the most formidable of any
in the river. The plan adopted to overcome them is to erect a
dam at the foot of the rapids ten and a half feet high, with a
Lock on the Indiana side, for the construction of which the rock
formation in the bed of the river, and the natural shape of the
contiguous country is admirably adapted. This improvement, in
addition to the certain and safe passage it will afford at that point
in all seasons, for craft of all descriptions, engaged both in the
ascending and descending navigation, will create a water power,
which, at a time not remote, will indemnify the two States in the
entire cost of the work. Being at the junction of two fine rivers,
the vallies of which are not surpassed in fertility, and their adap-
tation to all grain productions, and abounding in stone coal, and
as it is believed, in iron ore, it presents an invitation to capital
and enterprize for manufacturing purposes, which will not be
overlooked. . . . The cost of it [the work], when finished, is
estimated at $167,000. And although the State of Illinois has
appropriated $100,000, the money can only be expended in equal
sums, with the funds furnished by the State of Indiana; and as
her appropriation at present is only $50,000, of course a farther
appropriation is necessary to cover her moiety of the estimate. In
11 David Burr, the principal engineer on the improvement of the
Wabash River, reported to Blake and Alexander on November 23. The
report is printed in the Senate Journal, 1837-38, pp. 196-204.
106 Wallace Papers
doing this ... no new principle is introduced, as the cost of all
the public works, after the most careful calculations which can
be made, rests in some degree upon conjecture. In some cases the
estimate will exceed and in others fall short of the actual cost.
There is an unexpended balance of appropriation, which should
it be the pleasure of the General Assembly to transfer to this
object, would save to a considerable extent, a draft upon other
resources and the manner of so disposing of it, would seem pecu-
liarly proper. In the year 1834, the General Assembly appropri-
ated the sum of twelve thousand dollars to be expended with a
like sum, to be furnished by the State of Illinois for the improve-
ment of the navigation of the Wabash, by Commissioners mutual-
ly appointed by the two States. The Agent on the part of this
State, under said commission, has furnished data by which it
appears that the balance now in his hands, and not subject to
existing contracts or other engagements relative to the improve-
ment of the river, is about 5,000 dollars.1'- The commission on
the part of Illinois has been rescinded, and the duties of it trans-
ferred to the board of public works. The service under this com-
mission has been confined to the river below the Rapids. In
what manner the Wabash should be improved below that point,
is an important and as yet unsettled question. The wide river
bottoms and the nature of the obstructions in some places, seem
to render inapplicable the slack water principle; and it may
eventually be necessary to resort to one or more canals ; but be
this as it may, it appears to the board, that the views of the public
authorities relative to this department of the services should, for
the present, be concentrated at the Grand Rapids.
In obtaining release for the use of water power, the members
of the Board have in many cases, been met by objections and
murmurings and a positive refusal either to donate or sell to the
12 An act was passed requiring Andrew Gardner, commissioner on
the part of Indiana under the 1834 act, to pay to the State Board of
Internal Improvement the sum of $5,059.2+. Laws of Indiana, 1837-38
(local), 379-80. An additional $50,000 was also appropriated to meet
the $100,000 appropriated by Illinois. Ibid., 437.
Report of Internal Improvement Board, December 15, 1837 107
State at a fair equivalent. As the use of water power is indispen-
sible, and all appeals to liberality, and a sense of public duty
have proved fruitless, the board desire to be understood as recom-
mending with more than common earnestness, that a law be
passed, to condemn the small lots of land necessary for the use
of water power, in the same manner that property is now taken
to the public use for other purposes. They are aware that it is a
delicate matter to seize upon private property, and that it is gen-
erally considered a harsh measure; but when a great object is to
be carried out by it, promotive of the interests of the whole com-
munity, and that particular interest cannot be preserved in any
other manner, it will not be denied that it is both constitutional
and proper to do so. The authority could be given in such manner
as to protect fully the just claims of the citizen. It is farther
respectfully suggested, whether provision by law should not be
made, for obtaining some small lots of ground for the necessary
depots, incidental to rail road operations, and machinery and
other property appurtenant to such a road, rendering some arrange-
ments of the kind indispensably necessary.13
An exploration and survey has been made, under the order of
the General Assembly, from the feeder dam on the Cross-cut
canal, along the west side of Eel river, diverging towards Black
creek, to ascertain if a passage for said canal could not be effected
in that direction ; but it has been found that a range of inter-
mediate hills presented an insuperable obstacle.
On the Erie and Michigan canal, a corps of engineer has been
engaged the greater part of the season, examining the country
thoroughly, testing its adaptation to the contemplated improve-
ment, with a view to its definite location, and final connexion
with the Illinois canal. The President and Principal Engineer of
that canal, have recently made a survey for the route on the
Illinois side, and found it entirely practicable to make that con-
13 See a special report on this subject, dated January 28, 1838, printed
below. No legislation was enacted at this session concerning these
matters.
108 Wallace Papers
nexion. . . . They therefore regret, that the acting commissioner
on that line was limited in his examinations, by an act of the
General Assembly, which required the counties of St. Joseph,
Laporte, Porter, and Lake, to advance a sufficient sum to defray
the expenses of the survey from the mouth of Salt creek, or
some suitable point westward to the Illinois line, which was not
made by them. This law conflicts with the public interest, and
. . . the Board beg leave to recommend the repeal of that feature
of it. . . .
The Michigan road has also been examined under the require-
ments of an act of the last session ; and the report of the officer
fully specifying the character and cost of the improvement rec-
ommended will be shortly submitted. A thorough exploration has
been made from the point where the Cumberland road crosses the
White Water canal, thence north-west by Newcastle towards
the Central canal, to ascertain the practicability of connecting
these works by a cross-cut canal ; and it may now be considered
as settled, that the country does not afford the necessary facilities
for that kind of improvement. . . .
The location of that part of the Madison and Lafayette Rail
road which lies between Crawfordsville and Lafayette has been
made, and the cost in detail estimated. . . .14
A survey and estimate have been made by Mr. Torbert, one
of the engineers in the permanent service of the State, for a canal
down the valley of the East Fork of White [water] River, from
Richmond to Brookville. . . .15
Without going farther into particulars, the Board request the
attention of the General Assembly, to the report of Mr. Williams,
the Principal Engineer of the State, a copy of which is hereunto
annexed and made a part of this report.16 It contains a detailed
statement of the progress of our public works, and the surveys and
14 See Senate Journal, 1837-38, pp. 212-17. It was decided at this
session to build a macadamized road rather than a railroad between
Indianapolis and Lafayette. Revised Laius of Indiana, 1837, p. 354.
15 Senate Journal, 1837-38, pp. 252-55.
16 For the report of Jesse L. Williams, principal engineer, see ibid.,
204-42.
Report of Internal Improvement Board, December 15, 1837 109
questions connected with them, and various views of his, shed-
ding much light upon these subjects. . . .
Respectfully submitted,
D. H. Maxwell,17
Sam'l Lewis,
J. B. Johnson,
Elisha Long,
John Woodburn,
John A. Graham,
John G. Clendenin,
D. Yandes,
Thos. H. Blake.
Indianapolis, Dec. 15, 1837.
17 The internal improvement act of 1836 provided for a State Board
of Internal Improvement to consist of the three Wabash and Erie canal
commissioners and six persons to be appointed by the Governor with
the advice and consent of the Senate. Of the members who signed this
report, all had been members of the original board except Graham
and Yandes and they had been serving since January, 1837. Record of
Commissions issued by the Executive, 1837-1845, in Archives Division,
Indiana State Library.
By an act of January 25, 1838, the appointment of board members
was taken from the Governor and provision made for their election by
joint ballot of the Senate and House of Representatives. Revised Laivs
of Indiana, 1837, p. 355. Clendenin, Lewis, and Graham were re-
elected as board members by the Assembly on January 24, 1838, upon the
expiration of their terms. House Journal, 1837-38, pp. 360-61. Then in
September, 1838, Yandes resigned and Governor Wallace appointed
Alexander F. Morrison, a Democrat, to serve in his place until the
General Assembly could choose a successor. However, when the As-
sembly met they passed an act to abolish the nine-member board and
elect a new one of three members. Samuel Lewis, John A. Graham,
and ex-Governor Noah Noble were elected to the new board on Feb-
ruary 8, 1839. Laws of Indiana, 1838-39 (general), p. 3. They served
only one year as the following General Assembly further reduced the
board to one member, Noah Noble. Ibid., 1839-40 (general), 51.
110 Wallace Papers
Treasurer of State : Report on Surplus Revenue
Treasurer's Office,
Indianapolis, 18th Dec. 1837.
To Hon. David Hillis, President of the Senate:
I herewith transmit, to be laid before the Senate, the follow-
ing Report in relation to the operations and condition of the Sur-
plus Revenue of the United States, deposited with this State.
Very respectfully, Your ob't servant,
N. B. Palmer,
Treas. of State.
Receipts
There was received from the U. States Treasury on the 25 of
January last drafts in favor of the Treasurer of this State as
follows, viz :
Draft on Branch Bank at Madison ....$ 95,583 83
Draft on Branch Bank at Lawrence-
burgh 95,583 83
Draft on Branch Bank at New
Albany 95,583 82 $286,751 48
On the 22d March there was received like drafts as follows:
On the Branch Bank at New Albany..$ 95,583 82
On the Branch Bank at Madison 95,583 83
On the Branch Bank at Lawrence-
burgh 95,583 83 $286,751 48
On the 9th of June there was also received like drafts as follows :
On the Branch Bank at New Albany..$ 95,583 83
On the Branch Bank at Madison .... 127,737 02
On the Branch Bank at Lawrence-
burgh 63,430 63 $286,751 48
$860,254 44
1 Senate Journal, 1837-38, pp. 281-83.
Report on Surplus Revenue, December 18, 1837 111
Disbursements
There has been paid to the Loaning
Agents in the several counties as per
abstract of the different agencies
herewith appended, the sum of $567,126 16
Paid over to the Commissioners of the
Sinking Fund the sum of 286,751 48
Amount apportioned to the counties
of Lake, DeKalb, and Wells, not
applied for by those counties but
loaned by the Treasurer of State .... 6,376 80 $860,254 44
The Legislature in passing upon this subject last winter, seemed
to have passed the act requiring the Treasurer of State to dis-
tribute the two first instalments among the several counties, upon
the assumption that the money to be deposited, would be paid at
the seat of Government ; as no provision was made by law for
obtaining the funds from the distant Banks upon which drafts
were sent.
It will be perceived that the drafts were altogether on the river
Branches. To have given checks to the Agents on those branches,
would have greatly postponed the loaning of the funds, causing a
great loss of interest; besides many of the Agents would have
refused to incur the expense of the additional journey to the
river, and the money would have remained unproductive in the
vaults of the Banks.
With a view of obviating the difficulties which thus presented
themselves, the undersigned determined so soon as the apportion-
ment among the different counties could be made, and the neces-
sary forms prescribed, to go in person to the several Branch
Banks for the funds.
I accordingly made two trips to those branches on my own
expense and responsibility, to bring the funds to Indianapolis, in
part, and to otherwise dispose of the balance in such other
branches as would be most convenient to the agents entitled to
draw the same.
112 Wallace Papers
Presuming that it would be desirable to the borrowers to have
a portion of the funds in specie, and convenient also to the agents
in making change, I addressed letters, previously to leaving Indi-
anapolis, to such of the receivers of public moneys as I knew
deposited in those branches on which drafts were drawn, request-
ing them to hold up their deposits a few days, until I could make
some arrangements with the deposit Banks by which the specie
could be left at different points in the interior, to be distributed to
the loaning agents. By this arrangement a portion of specie was
provided at the different points of disbursement.
It will be seen by the accompanying abstracts, that the total
amount of interest received by loaning agents is $45,128 00 and
that the amount paid over by them to school commissioners is
$45,457 34. It will be seen also, that the main portion of the
money has been loaned on personal security, being $484,562 on
personal and $79,604 on mortgaged security. In the further
operations of this fund, — in the collections which it will doubt-
less become necessary to enforce by law, and the various questions
which may arise in the management of so large an interest, much
legal advice will be required by the agents, and in many prose-
cutions, the services of an attorney will be required.
It is respectfully suggested whether the public interest would
not be much better secured, by making it the special duty of the
prosecuting attorneys to attend to the matter as a part of their
official obligation.
If the duty should be considered too onerous for their present
compensation (of which I think there is no doubt) it would be
economical to give them such increased salary as shall be com-
mensurate with the increased burdens imposed, rather than sub-
ject the state to the payment of fees for such accidental and
individual services in the several counties as would be indis-
pensable, if left to the discretion of agents to employ counsel as
contingencies might require.
2
Respectfully submitted,
N. B. Palmer, Treasurer of State.
2 The paragraph omitted refers to the abstracts which accompany the
report; they are not reprinted here.
Merrill to the Senate, December 29, 1837 113
Wallace: Nomination for Canal Fund Commission1
Executive Department, Dec. 19, 1837.
Hon. David Hillis, President of the Senate:
Sir — In compliance with the act of the legislature creating the
Board of Canal Fund Commissioners, I nominate for the consid-
eration of the Senate, Caleb. B. Smith of Fayette county to fill
the vacancy in said Board caused by the resignation of Jeremiah
Sullivan, and respectfully request the advice and consent of the
Senate thereto.2
David Wallace.
President of State Bank: Reply to Senate Resolution1
State Bank, Dec. 29, 1837.
Hon. David Hillis, President of the Senate:
In answer to a resolution of the Senate requesting the President
and Directors of the State Bank to "inform the Senate, at what
time and places, they intend to locate the 12th and 13th branches
of said Bank," the undersigned respectfully represents, that the
Directors not being now in session, nor expecting to meet again
1 Senate Journal, 1837-38, p. 292.
2 A board of three commissioners of the Canal Fund was created by
an act of January 9, 1832; they were to be appointed by the governor
by and with the consent of the Senate. William C. Linton, Nicholas
McCarty, and Jeremiah Sullivan were the first appointees. Dorothy
Riker (ed.), Executive Proceedings of the State of Indiana 1816-1836 (In-
diana Historical Collections, Vol. 29, Indianapolis, 1947), 686. Linton
died January 31, 1835, and Samuel Hanna was appointed in his place.
McCarty resigned March 24, 1836, and was succeeded by Isaac Coe ;
then Sullivan resigned in May, 1837, to become a Supreme Court judge.
Caleb B. Smith received an interim appointment to run until the meeting
of the General Assembly. The Senate consented to Smith's nomination
with only one dissenting vote. Ibid., 687; Senate Journal, 1837-38, p.
293. Smith had solicited the appointment. See Messages and Papers
of Noah Noble, 540.
l Senate Journal, 1837-38, pp. 173-77. Another communication of
Merrill's regarding the location of branch banks is printed in ibid.,
411-19.
114 Wallace Papers
until the Legislature will probably have adjourned, it is not in
his power, to give all the information on the subject which the
Senate may desire, but as he has heard the matters referred to in
the resolution, discussed in the Board, and the opinions of most
of the members expressed respecting them, he begs leave to
submit, for the consideration of the Senate, a brief sketch of what
has been done, and his views of what the Board are desirous of
doing. It must be recollected however, that the Board meet only
once in three months, that changes are continually occurring
amongst the members, and that as many of them have little
personal knowledge of the northern part of this state, their opin-
ions may be much changed, when they obtain further information.
Two Committees of the Board have visited the towns in the
12th district, claiming the location of the branch, one in May
1836, and the other in May 1837, and both committees were
strongly impressed with the propriety of locating two branches
in that district, if the Board had been authorized so to do. The
first committee gave rather a preference to South Bend, in the
expectation that there should be one at Michigan City at no
distant day, though if there were to be but one branch in that
district, and that to be established in 1836, their preference would
have been in favor of Laporte. The second committee appeared
to prefer Michigan City, but the members of the Board were
so much divided in opinion, that until the vote had been actually
taken, no one could tell which point would have been voted for
by a majority of the Directors. The subject was postponed how-
ever, a part of the Board having doubts of the propriety of locat-
ing a new branch while specie payments were suspended, and
another part not being satisfied as to the point of location.
At the last meeting, the subject again came up, when it appeared
that of the three points presenting claims to the location, about
an equal number of the Directors were in favor of each. After
much discussion, a committee of five directors, none of whom had
ever visited the northern part of the state, were appointed to
''make further examination of the 12th district and report at the
August session of the Board a definite point for the location of
Merrill to the Senate, December 29, 1837 115
the branch." Should that be done, the branch may be organized
and ready for business next November. -
The consent of the branches has never yet been given to the
amendment of the charter, providing for a 13th branch.
There is no unwillingness on the part of the present branches,
to consent to the establishment of a branch on the Wabash between
Lafayette and Fort Wayne, and two more branches in the north-
ern part of the state, whenever their organization shall be re-
quired by the business of the country and they shall be authorized
by law.3
In reference to another resolution of the Senate, requesting the
President and Directors of the State Bank to "inform the Senate
at wThat time the Bank will resume specie payments, also what
kind of funds are received at the branches in payment of debts
due the bank or branches," the undersigned respectfully submits,
that the kind of funds received by the bank and branches in pay-
ment of debts is a matter left to the discretion of each, but that
in this, all of them endeavor to accommodate the public, by taking
all funds that are current in the vicinity.
All the Bank paper of Kentucky, of the south part of Ohio,
of Virginia, and that of most of the Eastern States, is in general
taken without objection, though in this they must be governed
by the opportunities presented to them, for paying out what
they receive.
In relation to the resumption of specie payments, and the views
of the State Board on that subject, the undersigned submits for
the consideration of the Senate, a report and resolution made by
a committee during their late session and concurred in unani-
mously by the Board.
2 At the following meeting of the board of directors of the bank,
Branch No. 12 was located at South Bend. See Merrill's communication
to the Senate regarding the location, in House Journal, 1837-38, pp.
411-19. See also below, 195.
3 Branches No. 13 and 14 were later located at Michigan City and
Logansport, respectively. The former apparently opened in the early part
of 1839. See below, 195, 310-11. Insufficient subscriptions prevented the
opening of the Logansport branch. John Tipton Papers, 3 :819n.
116 Wallace Papers
The committee, to whom was referred the subject of a "resump-
tion of specie payments" beg leave to report, that they have had the
subject under consideration, and now submit the result of their
deliberations. It will be remembered that specie payments were
suspended on the 18th of May, 1837. The circumstances which
led to that suspension are well understood. The community at
large seems to have acquiesced in the measure, as one of necessity,
and an argument to prove its propriety, so far as we are concerned,
is deemed at this time unnecessary. The question is not now, in
relation to the policy of the measure then: — the event has hap-
pened, and the only question is, how long the suspension is to be
continued by the State Bank of Indiana? In order to arrive at a
proper conclusion upon the subject, it will be necessary to review
the action of the Board heretofore upon the same. At the August
session 1837, and being the first session of the Board after the sus-
pension, the following resolution was unanimously adopted :
Resolved, That the Cashier of the Bank be authorized to call
the attention of the Western Banks to the propriety of holding a
convention for the purpose of preparing to resume specie payments
at as early a period as practicable, and that in case said convention
shall be held, the President or Cashier be appointed the delegate
on the part of this Bank.
That in pursuance of this resolution, the Cashier of the State
Bank addressed letters to the principal Western banks, and their
answers show that the anxious desire of all is in accordance with
that of this bank, to resume specie payments at as early a period
as is practicable and expedient, but the New York Convention
being soon after proposed, no further action was had in relation
to a western convention.
The whole course of the bank, from the suspension of specie
payments in May, to this period, shows beyond all contradiction,
that the Bank has, with a proper regard to the situation of its
debtors and the public interest, made every exertion to resume
specie payments, at as early a period as could with safety be
made. Our circulation from the 18th of May, the day when we
suspended specie payments, to the 31st October last, has decreased
$388,823 ; our discounts for the same period, have been decreased
Merrill to the Senate, December 29, 1837 117
$841,678; our debt to the government $718,870 12; our debt
due to other banks $85,873 68; our individual deposites $114,-
991 87; while our specie has decreased in the same period, but
$72,477 99. Thus showing that while in the same period, our
immediate liabilities have been settled to the amount of $1,308,-
588 67 ; our specie funds remain the same as they were on the
18th May last with the exception of the small decrease above
stated and which arises in part by payment of the Government
debt, and in part for accommodations in change for the public.
The whole action of the Bank has been, as far as possible, to be
prepared at all times, for the resumption of specie payments,
whenever the period should arrive which would make it politic
and expedient so to do. The circular letter of the President of
the Board to the different branches, all the resolutions and orders
of the Board itself show, that the earnest wish of those who regu-
late the concerns of the State Bank, has been to promote at as
early a period as possible, the desirable object of once more plac-
ing the circulation of the Bank upon a specie basis.
The committee are gratified in finding that the branches in
this matter, "have come up manfully to the work." Every one,
who is at all acquainted with banking operations, knows, that
the safest of all fiscal dealings by a bank, is where the circulation
does not exceed twice the amount of specie in its vaults. The
former is with us continually decreasing — while but little of the
latter is going out. At the date of our last return, our circulation
was $2,205,812; our specie $1,048,714 72, making our circula-
tion only $157,097 28, more than twice the amount of specie in
our vaults — a comparison with any other institution will show our
superior ability to redeem our paper in specie whenever a resump-
tion shall be deemed advisable.
Having thus shown the action of the Board in relation to the
resumption of specie payments, it will be expected, that the com-
mittee should offer some views in relation to the probable time
for the accomplishment of this highly desirable object — an event
as much desired by this Board as it possibly can be by the com-
munity at large — by our bill holders, and by all who wish to see
our issues based upon, and redeemable at all times in gold and
118 Wallace Papers
silver. Every one who knows any thing of the causes which led
to the suspension of specie payments on the part of this, as well as
the western banks generally, must be well aware that the sus-
pension was involuntary on their parts. The difficulties in our
monetary affairs first commenced on the seaboard, in the banks
east of the mountains, New York may be considered the focus
of all the banking — if not of all the business operations of the
country. The stoppage of specie payments by a single institution
there, vibrates throughout the whole country. The suspension of
all creates dismay — if it does not bring ruin upon similar institu-
tions throughout the Union. They regulate the domestic as well
as the foreign exchange of the United States, and whether con-
nected with them directly or not, every bank in the Union must
feel the full force of their operations, either for good or evil.
Situated as we are, with the rate of exchange and the balance of
trade so evidently against us; with the premium existing upon
specie, above its par value for exportation — it would be the height
of folly, as the committee believe, for the bank to resume specie
payments, until some action is had upon the subject by the banks
east of the mountains. Is not our present paralysis, better than
entire dissolution ? What would be the effect of a resumption of
specie payments by the State bank of Indiana, without a mutual
co-operation of solvent institutions beyond the mountains? — The
answer is easy. Every dollar of our circulation, whether issued
by discount or otherwise, would return directly to our counters,
with a demand for specie. Without a general resumption — it
would be then as it is now, a matter of merchandize, daily exposed
on the stalls of the exchange in our large cities. With the present
premium it would bear, as it would certainly receive, a carriage
across the mountains. Our vaults would be drained, our cus-
tomers distressed, our paper dishonored, our bill holders the
sufferers, our citizens oppressed to gratify the avarice of brokers
and speculators, the price of all property reduced to one-fourth
its real value, and when the time came, as come it zuill shortly, for
the resumption of specie payments here, we should be found with-
out a dollar in our vaults — our paper irredeemable — the State
Merrill to the Senate, December 29, 1837 119
bankrupt, and individuals ruined. With this view of the subject,
the committee believe the true policy is "to watch the signs of the
times," and be prepared at any moment to resume specie payments
when events elsewhere shall demonstrate its policy and expediency
here. The day is not far distant, when, your committee believe,
a resumption may take place without injury to the bank, to the
State or to the public — and that ere long, every dollar of the notes
of the State bank of Indiana, may be redeemed in gold and silver.
The banks in New York have sent a circular to this bank, request-
ing us to send a delegate to meet them in convention in that city
on the 27th instant. This bank has accepted the invitation in the
same spirit of courtesy and good faith, in which it appears to have
been made. Our delegate is there, and has been instructed earnest-
ly "to urge the resumption of specie payments at the earliest day
practicable." As soon as the time is fixed, the State Bank of
Indiana, will not be found laggard in the performance of a
duty, which she will then owe to herself, to the State, and to the
community at large, who under all circumstances have so gen-
erously stood by and sustained her.
The committee submit the following resolution:
Resolved, That the President of this Board be authorized and
directed, and he is hereby authorized and directed to adopt any
measure in his power to induce a resumption of specie payments
generally, and so to direct the operations of the branches that they
shall be prepared to resume specie payments at the first moment
practicable.
It is not in the power of the undersigned, to add much to the
foregoing report, which expresses in general the views of the whole
board. The convention has been held, but not being fully satis-
fied with the statistical information before them, that they could
fix an early and precise time at which specie payments could be
resumed with most advantage to the country, they adjourned
until the 2d Wednesday of April, recommending the banks gen-
erally to prepare by all means in their power for an early and
continued resumption.
120 Wallace Papers
That this bank and the western banks generally, can and will
resume specie payments, at an early period, there is in the opinion
of the undersigned, no reasonable ground to doubt.4
Respectfully submitted,
S. Merrill, President.
Report of Trustees of Indiana College1
[January 9, 1838]
To the General Assembly of the State of Indiana:
In compliance with the provisions of the charter of the Indiana
College, the Trustees of said Institution respectfully submit their
annual Report.
In presenting this report the Trustees cannot refrain from an
expression of their deep-felt satisfaction at the increasing prospects
and success of the institution ; it still continues to gain a firmer
hold upon the confidence and affections of the community in the
midst of which it is located, nor does this confidence which has
been so justly inspired in the public mind from the expanding
usefulness and success of the institution, appear to be confined to
the immediate vicinity of the College, or to the limits of our own
State, it has spread throughout the whole extent (or nearly so)
of the valley of the Mississippi. By a reference to the annual cata-
logue of the officers and students of this institution, it will appear
that the number of the students in attendance upon the exercises
of the college has been gradually and steadily increasing since its
organization ; the causes of which the Trustees are confidently
induced to believe, may be found, not alone in the peculiar health-
fulness of Bloomington (the place of its location,) the morality of
her citizens, or the cheapness of boarding, but in the high and well
earned literary reputation of the President and Professors of
Indiana College.
4 See note 4, pp. 77n-78n, above.
l Senate Journal, 1837-3S, pp. 451-56. For earlier reports concerning
the college, see the Messages and Papers of Noah Noble, 129-31, 305-9.
Report on Indiana College, January 9, 1838 121
The Trustees would (as evidence of the flourishing condition
of the college,) direct the attention of the legislature to the cheer-
ing fact, that the number of students who are in attendance at
the institution, who contemplate prosecuting a regular collegiate
course of studies, is much greater than it has been at any previous
period since its organization, which fact alone is sufficient to sat-
isfy the most incredulous mind in community of the salutary
influence which this institution has exerted, and is yet exerting
upon the public mind, both in reference to the ability of the
Faculty to impart instruction to those who have capacity to receive
it, but likewise in reference to the indispensable necessity of a
thorough training and preparation of the youthful mind, prepara-
tory to the successful entrance of an individual upon the broad,
active, and expansive theatre of human life. The number of stu-
dents from distant states has rapidly increased within the last two
years, and it is an undeniable though gratifying fact, that many
young gentlemen who have pursued their regular collegiate course
of studies, in the colleges of adjoining states, until the time of
their entrance into the last year of their senior class, have aban-
doned those colleges, and have, and are availing themselves of the
advantages derivable from the institution of the learned President
of this institution.
The number of students who were in attendance during the
last collegiate year, was one hundred and thirty-seven. At the
present session, there are in attendance considerably upwards of
one hundred, and many more who intend returning have not yet
arrived. The Trustees would here remark, that the number in
attendance during the winter session, is never so great as in the
summer session, for which they are unable to assign any particular
reason.
The trustees of the college have within the past year, (owing to
the great increase in the number of the students, who desire to
prosecute a regular collegiate course of studies, as well as to pro-
vide for the proper accommodation of those who are classed as
irregulars,) been induced to add to the Faculty, two professor-
ships; one of mixed mathematics and Chemistry, which has been
filled by the election of Mr. Theophilus A. Wylie, a graduate of
122 Wallace Papers
the Pennsylvania University, (at Philadelphia,) a gentleman
eminently qualified for the station. The other of Greek and
French languages; necessary branches of English literature, arith-
metic, grammar, book-keeping &c. which is filled by Mr. Au-
gustus W. Ruter, a gentleman of high order of talents, who is in
part assisted by Professor Parks, whose urbane manners, age, ex-
perience and talents eminently qualify him for the discharge of all
the duties incumbent on him, in this department, but also as the
regular professor of languages. The other studies heretofore pur-
sued, are rigorously enforced by the faculty.
The government adopted in the institution, is in its character
parental, imitating as far as practicable, the government of a
father over his family ; experience has in part confirmed the trus-
tees in the belief of the propriety of this plan of governing the
students, more particularly the older class of them : it is believed
that no more effectual plan for forming a good moral character
in youth, and habits of industry and attention to any department
of business, can be adopted, than that which appeals directly to
the interest, duty, reason, honor and virtuous emulation of an
individual, which are deemed to be the most correct principles
upon which young gentlemen can base their character, and regu-
late their intercourse with the community. In furtherance of
this most desirable object, the Board of Trustees have, in addition
to the preceding form of government, made it the duty of the
President of the faculty, (commencing sometime anterior to the
present time,) to deliver a public discourse or lecture, on some
moral or religious subject, on each Sabbath day, in the college
chapel, to the students, who are recommended to attend. It is,
however, not made an imperative duty on them to do so. The
President understanding the views of the Board of Trustees on
this subject, carefully abstains from the inculcation of any sec-
tarian principles or doctrines. This course in connection with
other measures, which have been adopted, has produced, and is
producing upon the students, the happiest effects in forming a
character for correct moral deportment, and a rigid attention
to study: in which particulars it is confidently asserted that the
students in this Institution are not excelled, if equalled, by those
of any other in the Union.
Report on Indiana College, January 9, 1838 123
The charter of the college clearly prohibits the teaching, or
inculcation either directly, or indirectly, of any religious sec-
tarian principles. This provision has been strictly complied with :
sectarianism in the remotest degree being excluded from the pub-
lic or private instructions and discourses of the faculty. The
public discourses and private sentiments of the President in par-
ticular, will, it is believed, shield him from any imputation of
that kind. The hatred which all bigots bear to him, being the best
testimonial in his behalf in this matter.
The Trustees would here remark, that the public discourses
delivered by the president to the students on each Sabbath day,
are numerously attended by the members of other denominations
of Christians in Bloomington and its vicinity, whenever it is
convenient for them to attend, and that no complaint has ever
reached them in relation to the manner in which the president
discharges his duty in reference to this particular provision of
the charter; upon the contrary, the trustees are induced to believe
that it is one of the strongest evidences of the propriety of the
course which they have adopted. Nor would they have been thus
minute on this subject, but for the fact that prejudices have here-
tofore existed in the public mind against Indiana College, in rela-
tion to this particular subject; in view of this they deem it their
imperious duty, to defend the character of the Institution from
the malign influence, which such prejudices are calculated to
exert over its growing prospects and usefulness.
It is a source of great pleasure to the Board of Trustees that
they are enabled to announce to the public, and especially to the
patrons of the college, the pleasing intelligence that the college
library is at this time quite respectable. In addition to many valu-
able works which were previously on hand, there are added many
more; during the past year fifteen hundred dollars was appropri-
ated to the enlargement of the College Library and apparatus. By
the agency of the President an addition has been made of books
selected with great care in the Eastern cities, of a character
admirably suited to stimulate, and gratify, a taste for the solid
standard works of literature and science.
In addition to the regular course of studies pursued in the col-
lege, the students are divided for the performance of what are us-
124 Wallace Papers
ually termed "Saturday's exercises," into three departments; the
more advanced students in the department immediately under the
tuition of the President, engage in composition, declamation, deliv-
ering extempore (or with the aid of pre-meditation only) original
speeches, debating and rhetorical reading.
There are also two literary societies, each composed of about
thirty members, (students,) of the more advanced character, who
spend one evening in each week in exercises similar to the "Satur-
day exercises." Each society has furnished itself with a very
handsome library of choice and select books, the exercises of the
respective societies have had an astonishing effect in eliciting a
laudable ambition amongst the members and other students, to
excel in the improvement, and cultivation of their intellectual
powers.
The Board of Trustees have appointed a committee composed
of members from their own body, whose duty it is (in connection
with such other members of the Board as may see cause) to
attend the semi-annual examinations, and other exercises of the
students of the college, it was thought by the Board that such a
course would not only operate as a stimulus to the students to
excel in their studies, but likewise enable them to ascertain the
proficiency of professors and students in their various depart-
ments; the Board would further state that they cannot let the
present opportunity pass without bearing their testimony to the
honorable manner in which the students underwent their exami-
nations at the last annual college commencement; it would have
been particularly gratifying to the true patriot, and more especial-
ly to every Indianian could he have heard the classical and elo-
quent speeches delivered by the young gentlemen who graduated
upon that occasion, many of whom are the sons of citizens of
Indiana.
From the liberal legislation extended to the college by the
General Assembly of the State within the last two or three years,
the Board of Trustees have been enabled to secure an available
fund, (accruing from the sales of certain sections of the reserve
lands) equivalent to twenty-five or thirty thousand dollars, which
fund is exclusive of what has usually been termed the "permanent
Report on Indiana College, January 9, 1838 125
college fund," which is in the hands of the Treasurer of State,
who is the Superintendant of the Loan Office and the interest of
which alone was applicable to the use of the college. By a special
resolution adopted at the last September session of the Board of
trustees, it was determined by said Board not to use any of the
interest accruing on the permanent fund of the college, until the
principle and accruing interest should amount to one hundred
thousand dollars. This desirable object, we think, may be accom-
plished within five years, and still leave at the command of the
Board a fund sufficient, with the small tuition fees paid by the
students, to pay the President and Professors of the college, their
usual salaries, erect the necessary buildings which may be needed,
and enlarge the library and college apparatus.2
Boarding can be obtained in moral and respectable families in
the town of Bloomington and its vicinity at a price varying from
$1 50 to $2 per week ; in view however, of the increasing number
of students, and fearing some difficulty might in future arise in
obtaining comfortable boarding, the Board of Trustees have
caused to be erected a large two story brick building, sufficient
(when finished) to accommodate forty or fifty persons. The
building will be completed in May next, and the necessary ar-
rangements have been made for the reception at that time of such
as may desire to avail themselves of its advantages. The adoption
of this plan it is believed will prevent any difficulty either in
obtaining the necessary accommodations for students, or increase
in the price of the same.
The health of the students has been excellent, not a solitary case
of severe indisposition, having occurred within the past year.
Congress, ever mindful of the interest of the great body of the
people, being desirous to diffuse the genial influence of education
through out the community, did by the second proposition of the
sixth section of an act of Congress, approved April 19th, 1816,
entitled "an act to enable the people of the Indiana territory, to
form a Constitution and state government, and for the admission
2 In response to a resolution of the House, the State Treasurer sent
to that body a statement on the situation of the College Fund. House
Journal, 1837-38, pp. 203-4. See also above, 72.
126 Wallace Papers
of such state into the Union, on an equal footing with the original
states: Provided that all the Salt springs within the said territory,
and the lands reserved for the use of the same, together with such
other lands as may, by the President of the United States, be
deemed necessary and proper for working the said Salt springs,
not exceeding in the whole, the quantity contained in thirty-six
entire sections, shall be granted to the said state, for the use of
the people of said state, and the same to be used under such terms,
conditions and regulations as the legislature of the said state shall
direct." And, whereas, Congress did subsequently by an act of
said board, approved July 3d, 1832, authorize the legislature of
said state to dispose of said lands, and apply the proceeds thereof
to the purposes of education in said state. And whereas, the legis-
lature of the state did by an act, approved Feb. 2, 1833, author-
ize commissioners, clothed with authority to sell said lands with
a view to raise funds for the purposes contemplated by the original
donors. And whereas, said lands have been sold and the funds
accruing from said sale have not by any act of the legislature
of said state been definitely appropriated to any specific object.
The Board of Trustees would most respectfully suggest to your
honorable body the propriety of appropriating said funds to the
endowment, and establishing of a permanent professorship in the
Indiana College, with the view of educating and preparing young
men, free of any tuition fee, to become teachers in the primary
schools of the state.3
3 Apparently no action was taken on the proposal during the 1837-38
session of the General Assembly. A normal school for the training of
teachers was in operation for a short time in 1852-53. James A. Wood-
burn, History of Indiana University. Volume I. 1S20-1902 (Indiana Uni-
versity, 1940), 178. The Assembly did act to make the college a univer-
sity. Lanvs of Indiana, 1837-38 (local), pp. 29+-98. The Senate committee
that reported the bill to establish a university, believed "it was the
intention of the framers of the constitution to establish at as early a
period as convenient a State University in which should be taught such
branches of the useful arts and sciences as would not only qualify the
youth of the State for the various learned professions, but also so much
only as might enable that portion of our youth, who desire to pursue
the highly useful avocations of agriculture and the mechanic arts, thereby
extending to every interest in the community, all those inestimable
blessings, which arise from the diffusion of science through every depart-
ment of business." Senate Journal, 1837-38, pp. 519-20.
Report on Indiana College, January 9, 1838 127
The Board of Trustees are aware that they may by this rec-
ommendation, subject themselves to the charge of cupidity, in the
estimation of some portions of the community, who may feel some
jealousy towards this institution. They nevertheless, confidently
believe that the fund could not be disposed of in any manner, so
well calculated to carry out, so effectually, the liberal views and
intentions of Congress, and the act of the State Legislature, as
the one herein suggested. If arguments were needed to prove the
correctness of the foregoing position, they can be adduced. It is a
fact which cannot be successfully controverted, that the founda-
tion of a good education must be early laid in the youthful mind,
and that this object, as a general rule is to be accomplished, or
missed, in the incipient stages of instruction, which first com-
mences in the primary schools of the country. How important,
then, is it to lay well the foundation, if you desire the super-
structure which is to be erected thereon, to be durable. If this
recommendation of the board, should meet with the favorable
consideration of the Legislature, the board do most confidently
believe, that within the short space of ten years, the State of
Indiana will be furnished with a sufficient number of competent
teachers for all the primary schools of the State, than which a
more gratifying and useful object cannot be attained.
In concluding this report, which has already been protracted,
and minute, (and the only apology for which is, an earnest desire
on the part of the Board, to place within the knowledge of the
Legislature, a true and faithful exposition of the condition of
that institution, which we ardently hope and believe will, with
prudent management, become the ornament of the State, and
prove a lasting monument of the wisdom of its founders,) we
cannot with out a dereliction of duty fail to recommend to your
honorable body, the propriety of granting a charter incorporating
it as a State university : this measure we deem of importance,
not from the consideration alone, that we believe it was con-
templated by the framers of our most excellent constitution, that
the Legislature should at as early a time as convenient, establish
a State University; but from the fact of the tendency of such a
measure, to diffuse information over every portion of our com-
128 Wallace Papers
munity ; to extend the sphere of its usefulness, and to improve
the moral and intellectual condition of the human family, by
which means more than all others combined, are we to expect a
perpetuity of those inestimable blessings of civil and religious
liberty, arising from our present happy republican form of
government.
Paris C. Dunning,
Chairman of the committee of the board.
House Committee on Canal Fund : Report on
Conduct of Fund Commissioners1
[January 27, 1838]
The committee on the Canal Fund, on the part of the House of
Representatives, to which was referred a resolution of the House,
in the following words, to wit :
Resolved, That the committee on the Canal Fund be authorized
and empowered to send for persons and papers, if they deem it
expedient so to do, to enable them fully to investigate the official
conduct of the Canal Fund Commissioners, as well those in
office, as those whose term of service has expired. First, as relates
to the improper use of the public money; second, what account
has been rendered of the exchange that may have come into their
hands, obtained between eastern and western funds; third what
amount they may have retained in these funds as pay; and
whether they or any of them, have refunded to the State, the
excess over two dollars per day they may have received as com-
pensation since the explanatory act of the last session, limiting the
pay of the Fund Commissioners to two dollars per day, and lastly,
to enquire what members of the Board made sale of the State
Bonds to the Cohens of Baltimore, by which the State is likely to
lose a large sum, and make report of the result of their investiga-
tion to the House.
i House Journal, 1837-38, pp. 339-45.
Report of House Committee, January 27, 1838 129
After giving the several matters contained in said resolution a
patient examination, respectfully report :
That in reference to an improper use of the public money, your
committee have carefully scrutinized the action of the Fund Com-
missioners as well those whose term of service has expired as those
now in office, and are of opinion that no use has been made of
any public monies, which was not authorized by law, and that
said Commissioners, have exhibited satisfactory vouchers for the
disbursement of all monies which passed through their hands.
In answer to the inquiry of "What account has been rendered
of the exchange that may have come into the hands of the said
Commissioners in difference obtained between eastern and western
funds?" Your committee discover that all premiums thus received
have been scrupulously accounted for, and added to the original
amount of the specific fund upon which they accrued.
On the third enquiry, relating to the retention of pay by the
Fund commissioners, being the excess over two dollars per day,
they may have received as compensation since the "explanatory"
act of last session, limiting the pay of the Fund Commissions
to two dollars per day. The Commissioners inform your com-
mittee, that they have retained the whole amount claimed by them
previous to the passage of the act of last session, being four dollars
per day, on the ground that the act of 1834, creating a State
Bank and providing that the Canal Fund Commissioners should
negociate the loans for said Bank, in addition to their original
duties, and providing that they should receive the "same" com-
pensation as they were by law allowed for their original duties
under the Canal law, which was two dollars per day ; and that
they understand and think the Legislature intended that they
should receive the additional sum of two dollars per day during
the time of their additional labors imposed by the subsequent act ;
and they are also of the opinion that the "explanatory" law of last
session only intended to direct future operations, rather than to
explain any previous action.
The Fund Commissioners also inform your committee that the
Board of Fund Commissioners as a whole made the negociation
for the sale of state bonds to the Messrs. Cohens of Baltimore,
130 Wallace Papers
the conditions of said loan having been submitted to the consider-
ation of said Board before the consumation of said negociation,
report see statement marked (C.) accompanying this.2
c.
Indianapolis, January 26, 1838.
Hon. C. C. Graham, Chairman of Committee C. F.
Sir: In reply to the enquiries made by your committee to the
Fund Commissioners this morning, we beg leave to state for the
information of the Legislature. That at the time the loan was
made of the Messrs. J. J. Cohens, Jr. and Brothers of Baltimore,
Jeremiah Sullivan, Sammuel Hanna and Isaac Coe were the Com-
missioners, and had been some time at the East without being able
to effect any loan on the terms authorized by law. That the
proposals of the Cohens for taking the loan was accepted by
Samuel Hanna and Isaac Coe in Washington City on the terms
agreed upon by the whole Board a few days previous in New
York. Immediate after which, two of the Commissioners returned
home, leaving Dr. Coe to complete the Bonds by signing the
dividend warrants, and after making enquiry as to the entire
solvency of the Cohens, and the responsibility of the security
which they should offer to consummate the contract. After a
report of Dr. Coe to each of the other members of the Board
of the precautions he had taken of consulting and advising with
a number of the bankers and business men of Baltimore and New
York, and their having entire confidence in the ability of both
the principal and security for the amount of the loan, each member
of the Board approved of the security taken.
Samuel Hanna
Isaac Coe
2 Statements A and B, concerning the pay of the Fund Commissioners,
are omitted.
Report on Water Power, January 28, 1838 131
State Board of Internal Improvement: Report on
Canal Water Power1
Office State Board Int. Improvement,
January 28, 1838
To the Honorable the Senate of Indiana:
The Board of Internal Improvement have had the honor to
receive a copy of the resolution adopted by the Senate on the 13th
inst. requesting them "to report to the Senate the probable amount
of water power created by the construction of the canals of
this state, so far as the same are finished or under contract; and
also the probable revenue which may be derived therefrom, to-
gether with their views as to the best means of bringing these
water privileges into use, and the means necessary to secure the
interests of the state in respect to the water power generally;"
and in answer thereto respectfully submit the following estimate
with their views in relation to this subject.
The probable amount of water power created by the construc-
tion of the canals, so far as the same are now finished or under
contract, and the annual rent which may be received for such
power, when the value shall be brought into use, may be estimated
as follows :
Whitewater canal from Brookville
to Lawrenceburgh
Central canal, Indianapolis Division
Central canal, South Div. 9 mo. in
each yr
Cross-Cut canal (not all the year)
W. & E. canal from state line to
Lafayette
W. & E. canal from state line to
Lafayette (not all the yr. )
Total $89,000
i Senate Journal, 1837-38, pp. 577-79.
No. of pr's
of 4J4 feet
millstones
Annual
rent
Total
value
190
90
$140
160
$26,600
14,400
25
75
125
125
3,125
9,375
170
150
25,500
80
129
10,000
132 Wallace Papers
From this estimate it will be seen, that the water power created
by the construction of the canals constitutes an important interest,
which if properly husbanded will be a source of considerable
income, and of great benefit to the community. The direct revenue
derivable from this source is not all. By the employment of this
power in manufacturing, the freights of the canal will be greatly
increased, and thus the profits of the work, indirectly augmented
from this source. It is not supposed that the whole amount of
this power can be brought into use at once. It should be offered
for sale or lease very gradually, and with strict reference to the
wants of the country and its capabilities for sustaining manufac-
turing establishments. A contrary course would destroy competi-
tion and cause a sacrifice of the public interest. It may be reason-
able to suppose that within 10 years one third or one half of this
whole power may, if the country is prosperous, be employed in
manufacturing with profit to the lessees and benefit to the coun-
try, producing also a handsome revenue to the state.
In cases of this kind, where the water power belongs to the
state, there is always a strong tendency to underrate its value, and
to induce the state to part with it without a just compensation,
against which the Board feel it to be their imperative duty to
guard. Individuals, owning the ground where a lock or dam may
happen to be located, sometimes refuse to co-operate with the
state in bringing the power into use, except upon terms which
would secure to themselves a monopoly of water, without paying
the state any just equivalent. Applications are frequently made
from individuals so situated for a lease of the power on their own
ground upon such terms as they may prescribe. A claim of this
kind if allowed in one instance by the legislature, becomes a
precedent for another, and thus the evil would be likely to in-
crease, until this branch of our resources would be rendered com-
paratively valueless. And as the only means of guarding against
this tendency, the Board would beg leave respectfully to suggest
to the legislature a strict adherence to the policy embraced in
existing laws on this subject of interdicting the leasing or the use
of any water power by any arrangement whatever until the
ground on which such water is to be used shall become the prop-
Report on Water Power, January 28, 1838 133
erty of the state, either by purchase or otherwise. If this policy
be rigidly adhered to, until it be received as the established policy
of the state, the prospects of individuals of obtaining a monopoly
of the water power will be cut off, and as a consequence of the
difficulty of making purchases of ground at fair prices for the use
of the water, will be measurably done away.
The expectation of becoming themselves possessed of the water
power at a future period, at a very low rent, has doubtless, in
some instances, influenced the owners of the ground, on which
alone the water could be used, to decline selling such ground to
the State, even though a price equal to twice the value thereof has
been offered them.
At the same time that the strictest regard should be paid to the
security of private rights, and while full compensation should be
made by the State, for all property required for public use, it is
nevertheless believed to be incumbent on those charged with the
prosecution and management of the public works, to guard with
the utmost vigilance, the general interest to protect the State as
far as may be in their power from unjust exactions for individual
benefit, and to have a constant regard to the future productive-
ness of the improvements. As the construction of the canals will
create a considerable debt, for which the whole people of the
State are responsible, it is manifestly proper that every source of
income growing out of these works, should be carefully husbanded,
and provided for with a view to the benefit of the State, rather
than to individual accommodation.
When the title to the ground necessary to the use of the water,
becomes vested in the State, the power can be brought into market
as the public interest may require; a healthful competition can
thus be secured by giving a general notice of the sale, and the
privilege based at a fair price, and to persons who, from their
acquaintance with manufacturing, are competent to improve it in
a manner most beneficial to the country, and thus the interests of
the State, as well as of the neighborhood in which such power is
situated, will be most effectually subserved.
The board, in conclusion, beg leave to add that they are not
aware that any further legislation is required on the subject of the
134 Wallace Papers
water power, other than that suggested in their annual report, in
relation to the procurement of ground for its use, to which they
would respectfully refer.
Respectfully submitted,
Thos. H. Blake,
Pres. pro tem. of the Board.
Thomas C. Johnson to Wallace1
[February 12, 1838]
The State of Indiana,
Owen County, Set.
I Thomas C. Johnson Clerk of the Owen circuit court do
certify, that George E. Tingle has resigned the Office of Associate
Judge of the said court, in consequence of which there is a va-
cancy, to be filled by election to be ordered by the Governor.2
Given under my hand and the seal of the said court the 12th
day of February, A. D. 1838.
T. C. Johnson Clk.
His Excellency David Wallace
Governor of the State of Indiana, will pleas order an election
as soon as may be to fill the vacancy of Judge Tingle resigned,
as we have a prisioner who wishes to be let to bail and there is
no Judge in our county, one of our associates being absent from
the state.
Very respectfully, your obt. obt. Servant,
T. C. Johnson
Spencer Feb'y 12th 1838.
[Endorsed:] Owen Cty order for Election Ass Judge Issued
Feb. 20 1838
1 Secretary of State file, Archives Division, Indiana State Library.
2 Tingle had been commissioned associate judge on November 14,
1836, to fill out the term of Alexander Eason, deceased. John Conn was
elected in Tingle's place to fill out the remainder of Eason's term, which
would expire in 1840. Election Returns, April, 1S38, in Archives
Division.
Wallace to the Senate: Veto Message, February 15, 1838 135
Lewis G. Thompson to Wallace1
Indianapolis 13 Feb 1838
To His Excellency Gov Wallace
Sir an act having pass both Houses of this Genl Assembly
Organizing the cty of Whitley, You will please appoint Richard
Boughon of sd sd Cty as sherrif, and fix the first Monday in
Aprill for Electing the Township & Cty officers of sd Cty2
Respectfully
L. G. Thompson
His Excellency Gov Wallace
[Endorsed:] Appointed Feby. 16 1838 David Wallace
Wallace to the Senate : Veto Message1
Executive Department, February 15, 1838.
To the President of the Senate :
I herewith return to the Senate for its re-consideration, a bill
No. 40, entitled "an act to incorporate a certain company therein
named," agreeably to the request of the Senate contained in its
resolution of the 10th instant.
The views of the Senate as expressed in the preamble to said
resolution, renders it entirely unnecessary, for me to assign any
reason why I should not put my signature to this bill.2
David Wallace.
1 Secretary of State file, Archives Division, Indiana State Library.
2 The act organizing Whitley County was signed by the Governor
on February 17; it was to become effective on April 1. The county had
been formed three years earlier from territory attached to Allen and
Elkhart counties; Thompson, as representative from Allen County, also
represented in part the settlers who had moved into the new county.
1 Senate Journal, 1837-38, p. 732.
2 A bill to incorporate the Evansville Trust Company, which passed
the Senate on January 30 and the House on February 8, 1838. After
it had passed both houses, the Senate discovered it contained provisions
that would make it unconstitutional, and asked the Governor to withhold
his signature. House Journal, 1837-38, pp. 519, 568; Senate Journal, 1837-
38, p. 662. The Senate resolution did not state why that body considered
the bill unconstitutional.
136 Wallace Papers
Treasurer of State to Wallace1
Treasurer's Office
Indianapolis, 31st May 1838
Sir — I have just received from the secretary pro tern, of the
Lawrenceburgh and Indianapolis Rail Road Company a copy of
an order of the board of directors of that company asking the
appointment of commissioners in several [counties], to value real
estate to be mortgaged to the company, to be afterwards assigned
to the state, with a view of obtaining state bonds, under 25th and
succeeding sections of the Improvement act of 1836.
As the credit of the state, in this case, was manifestly granted
to that company with a view of making the rail road contemplated
by the charter, and for no other purpose; and as by the company's
report made to the last General Assembly, it appears that the
company has now on hand loaned at interest, nearly $200,000,
the avails of lands heretofore obtained of the state, and that the
operations on that work have been suspended, and to be resumed
(as stated in the report) only upon contingencies not likely soon
to happen: it has occurred to me that the company have no just
claim for any additional amount of state bonds at present ; and
that it is my duty under all the circumstances, to postpone all
action upon this matter until the next session of the General
Assembly.
Desiring, however, to discharge my duty on this subject, with
a proper regard to the rights and interest of the state and of the
company, having in view the intention of the law and the circum-
stances surrounding the case, I desire you will have the goodness
to give me your advice, as the Executive of the state, upon the
propriety of the course above suggested in regard to the postpone-
ment of the matter until next winter.2
Very respectfully, Your Obt. Serv't,
N. B. Palmer, Treasurer of State
To His Excellency, Gov. Wallace
i Documentary Journal, 1838-39, No. 34, p. 638.
2 See Wallace's reply, printed below.
Wallace to the Treasurer of State, June 13, 1838 137
Wallace to the Treasurer of State1
Executive Department,
June 13th, 1838
Sir: Your communication of the 31st May, 1838, is before
me, asking my advice as the Executive of the state, on the subject
of the recent application made to you by Lawrenceburgh and
Indianapolis Railroad Company, for the additional amount of
state bonds contemplated by the Internal Improvement act 1836.
The answer to it has been delayed in consequence of my absence
from town for several days past. I am satisfied after mature
reflection, that the determination you have come to concerning
this business is strictly correct ; and that you owe it to the people
of the state, in the faithful and vigilant discharge of your duties,
to decline acting on this application until the meeting of the next
Legislature. I cannot see, for my part, what grounds such a step
would give the company to complain of you. Public faith will not,
surely, be violated by it; the company cannot sustain any injury
from it ; for, by their own shewing, they have now in their hands
200,000 dollars of the state's money unexpended, and in addition
to which they declare, that they have suspended operations on the
road, and intimate strongly that they will not resume them but
upon contingencies, which may or may not happen. Where, then,
it may be asked, with the utmost propriety, is the necessity for
giving them more money? Will it not be time enough to furnish
the additional funds when the company shews a bona fide want
of them to further the prosecution of the work? I have no hesita-
tion in saying that it is; and that good faith, honesty and fair
dealing demand the existence of such a want to authorise, or
rather justify you to act in the way desired.
It may be urged, perhaps that you have no right to enquire of
the company what their intentions are. Grant it : but then you
are not bound to take notice of their intentions when they, un-
called for, solemnly declare and publish them to the whole people
through the medium of our legislative proceedings and journals?
I have no doubt of it, and I have no doubt furthermore, that
i Documentary Journal, 1838-39, No. 34, pp. 638-39.
138 Wallace Papers
were you to close your eyes to such declarations so made and
published, you would properly and justly subject yourself to the
charge of wilful and reckless negligence in the discharge of your
duties.
My advice to you, therefore, under all the circumstances, is, to
postpone acting on the company's application until the matter can
be laid before the next Legislature.2
Very respectfully, I am Sir, Your Obt. Serv't,
David Wallace
N. B. Palmer, Treasurer of State
2 The Lawrenceburgh and Indianapolis Railroad Company had been
chartered in 1832 for the purpose of constructing a railroad between
these two points; work was to commence in three years, and be com-
pleted in twelve. The corporation was in no wise, either directly or
indirectly, to engage in any kind of trade. When the internal improve-
ment bill of 1836 was passed, the Lawrenceburgh and Indianapolis
Railroad was made a part of the "system" and the company was allowed
to use the credit of the state to obtain funds for the prosecution of
the work to the amount of $500,000. Bonds of the state were to be
issued to the company for the sole purpose of obtaining money to con-
struct the work for which the company was chartered ; to use the money
for any other purpose would be a violation of the statute and a fraud
upon the state.
At the following session of the legislature the judiciary committee
of the Senate, to whom this correspondence and other documents were
referred, reported that the company had in 1836 obtained upon the credit
of the state the sum of $221,000 (see above, 89), but instead of using
this for construction purposes, $178,000 of it had been lent to individuals.
The only construction work being carried on was that in the town of
Lawrenceburg. This was very expensive and of no utility without the
completion of other sections. The committee commended the State Treas-
urer for delaying the appointment of appraisers. In their opinion the
company had forfeited all claims to the issuance of any more state bonds
until, instead of using their money to relieve the distress of stockholders
for their private benefit, they proceeded to construction of the railroad.
Documentary Journal, 1838-39, No. 25, pp. 526-28.
Work on the road did not proceed, and it was not until the late
1840's that interest in it was revived. Construction was taken over by
a private company in the early 1850's. It is now a part of the Big Four
system. Maurice Murphy, "The Big Four Railroad in Indiana," in
Indiana Magazine of History, 21(1925) :160-87.
Patrick Shields to Wallace, June 28, 1838 139
Daniel Ballenger to Wallace1
Wabash 21th June AD 1838
To His Excellency David Wallice Govenor of the State of
Indiana —
Dear Sir this note will inform you that I have resigned my
office as Associate Judge of Wabash County Indiana — My queli-
fications for this office in my opinion are not sufficient & I have
no time to read Law — My duties as one of the Judges of the
Eight Judicial Circuit have become burthensome — Therefore I
hope your Honor will exept my resignation and order an Election
for some more suitable Person to fill my vakency2
Your obedient servint
Daniel Ballenger
D Wallice G. la
[Postmarked:] Treaty Ground June 22, 1838
[Endorsed:] Order an Election for associate Judge for Wabash
County in place of Danl Ballenger resigned — July 17 1838
D Wallace
Patrick Shields to Wallace1
[June 28, 1838]
Sir It has become my duty to Resign the trust reposed in me,
as one of the Associate Judges of Floyd County2
pleas receive this my resignation and warmist thanks
I remain with due respect your humble servant
Patrick Shields
1 Secretary of State file, Archives Division, Indiana State Library.
2 Ballenger and Daniel Jackson had been elected the first associate
judges of Wabash County on May 4, 1835, and commissioned on the
28th of that month. Wilson B. Barlow was elected in August, 1838,
to fill out Ballenger's term. Election Returns, Archives Division.
1 Secretary of State file, Archives Division, Indiana State Library.
2 Shields had been serving as associate judge of Floyd County since
1827. Earlier, he had filled the same office in Harrison County. Execu-
tive Proceedings, 1816-1836, Index. He was born in Virginia in 1773,
attended Hampden-Sidney and William and Mary colleges, and came
140 Wallace Papers
New Albany Floyd County Indiana;
June 28th 1838
No News, but Warme Electionneering I am afraid our state
interests will be left out of view by the all absorbing party ques-
tion Vanburinism Subtreasury Specia System
[Addressed:] His Excellency David Wallace Govr of Indiana
Indianapolis
[Endorsed:] Order an Election for Associate Judge for Floyd
County — in place of Patrick Shields resigned. July 17, 1838
D Wallace
Jesse L. Williams to James B. Johnson1
Indianapolis, July 5th, 1838
Dear Sir:
I had designed having a further and more free conversation
with you before you left this, some few days since, on the all
important subjects connected with the progress of our public
works, but did not find time.
In common with yourself and several other members of the
board, I cannot but regret most deeply the departure from the
original policy of the friends of internal improvement, which
has been gradually brought about, and which is carried out by
the late advertisement for lettings on the several works. This
order for contracts not only provides for carrying on all the
works at once, but it goes further than this, and on some of the
lines seems almost to countenance the idea of constructing every
part of every work at the same time. This scattered operation
to Indiana Territory in 1805. The National Cyclopedia of American
Biography (Vols. I — , New York, 1898 ), 13:174; William H.
Roose, Indiana's Birthplace. A History of Harrison County, Indiana
(New Albany, Ind., 1911), 11-12. He lived another ten years. Tomb-
stone inscription, Fairview Cemetery, New Albany. Francis Moore, Sr.,
was elected September 15 1838, to succeed Shields. Election Returns.
i Documentary Journal, 1841-42, Senate Doc. No. 6, pp. 531-33. Wil-
liams was chief engineer for the Board of Internal Improvement; John-
son was one of the members of the board.
Williams to Johnson, July 5, 1838 141
was never contemplated by the original proprietors and advocates
of a general system of internal improvements. A reference to
the writings of that day will prove this. Nor did the idea of
letting detached portions of works in the middle of a line, receive
any countenance in the first report of the board. For although
the first lettings at this place and at Terre-Haute, are thus sit-
uated, yet the board refer to these two lettings as deviations from
their general policy, for which they give some special reasons. As
to their general policy, they distinctly avow their intention "to
put such portions under contract as in their opinion would be
soonest productive to the State, and at distances so remote as not
to interfere with one another in the price of provisions and labor ;
and further that the same when completed should be useful and
available works, in case war or some other contingency should arise
to suspend further operations."
The late order for lettings goes also to scatter the funds much
beyond what was contemplated by the present executive in his
inaugural address. In describing the plan of operations which he
recommends, he says, "It is to concentrate the means of the State
on portions of each work, at the same time commencing at the
most profitable and commercial points, to be designated by the
legislature, or the board of internal improvement, to complete
these portions respectively, before others are touched, and as soon
as completed put them into use, in order that the State may be
realizing something from them, while in the act of finishing the
remainder." The late executive (Gov. Noble) likewise in the
view taken of this subject in his last annual message (which it
has always appeared to me was too hastily rejected by the sup-
porters of the improvements) advocated a concentration of the
operations in still stronger terms.
The plan of operations which I am opposing cannot be approved
by the sober judgment of reflecting men. The evil resulting from
it are too obvious to need recital. Instead of carrying on the
improvements with a view to the earliest receipt of tolls, which
certainly was the original design, it is expending the fund in some
instances so that neither revenue to the State, nor any lasting
benefit to the people can be derived until the whole work is com-
142 Wallace Papers
pleted. Of course I am not objecting to those detached lettings
which are sometimes necessary for the purpose of embracing the
heaviest jobs, or to obtain feeders required for the navigation of
anj' particular division.
But the cause which produced this change of policy may be
inquired for. If permitted to assign a reason, I should attribute
the evil chiefly to that unfortunate feature in the original improve-
ment law, which as it has been construed, seems to constitute each
member of the board a representative of the particular work on
which he may be located. The citizens residing along the several
lines, in the middle as well as near the termination, very natural-
ly desire a commencement of the work in their vicinity; they urge
their views upon the attention of their commissioner, and consid-
ering him in some respects at least, as their representative in the
board, expect him to carry out their wishes.
If I am correct as to the leading cause of the error, the remedy
against its repetition is obvious. Let this representative feature
be stricken out of the law and the board placed upon more inde-
pendent ground, and made in fact as well in name a State
Board.2
The many important questions growing out of the construction
and management of the public works will make the station of a
member of this board, one of the most responsible and important
in the State. Much of good or evil to the State must at all
times depend upon their action. To guard properly the public
weal against the influence of sectional and neighborhood interests,
will require that the board be placed upon high and independent
ground. At the same time that the board is held to a proper
accountability to the legislature, it should be so constituted that
it may act regardless of neighborhood excitements, when the
interests of the State require it. Such are the respective boards
of Ohio, New York, and Pennsylvania, by whom the public
works of these States have been so successfully conducted. And it
was such a board I am sure, that was had in view by the original
advocates of the improvement system in this State. I know of no
2 Governor Wallace made this same recommendation in his message
to the legislature the following December. See below, 163-64.
Williams to Johnson, July 5, 1838 143
State where the representative principle is adhered to in the
organization of their board of public works, excepting Indiana
and Illinois.
You will observe that this suggestion does not necessarily
involve a reorganization of the board. If the laws were changed
the board would stand in a different attitude, and would doubt-
less pursue a policy quite different. I cannot be mistaken in
supposing that the unbiassed judgment of every member would
lead him to act as you have always acted, in favor of concen-
trating the operations.
It has been suggested that the interior counties would demand
a continuation of this policy of making detached lettings — that
they would claim an immediate participation in the advantages
resulting from the expenditure of the money, &c. I trust this is
not the case. There is a degree of eagerness in the public mind
to have every great object accomplished at once, which must be
restrained or the public interest will suffer.
From a careful investigation of this whole subject taking the
improvements as they are, and looking to the future as well as
the present, two prominent measures of State policy present them-
selves as essential at this time as well to the maintenance of the
credit of the State abroad as to inspire confidence at home. The
first of these has already been brought to view in the foregoing
remarks. It is to direct the energies and the means of the State
for some time to come, chiefly to connecting and bringing into
use the several portions of each work which have been commenced,
and to extending further into the interior those which will be
most profitable, and which are more immediately required by
the actual business and intercourse of the country. This policy
I have no doubt your board are ready to adopt and adhere to, if
relieved from, their local responsibilities growing out of their
representative character. The other measure alluded to is that of
making provision for raising prospectively an annual revenue for
internal improvement purposes in addition to that which may be
derived from the works themselves or from direct taxation. A
gradual increase of the stock of the State bank, so far as it may
be increased with out bringing upon the State the evils of a
144 Wallace Papers
redundant circulation, will no doubt present the readiest resources
for raising this additional revenue.
With the consumation of these measures, and with judicious
management of every interest connected with the improvements,
the finances of the State may be preserved in a healthful condi-
tion, her character sustained and elevated, and the ultimate and
entire completion of her great enterprise secured.
Very respectfully,
J. L. Williams
J. B. Johnson, member board internal improvement
Commissioner of the General Land Office to Wallace1
26 July 1838
Sir, I have had the honor to receive your letter of the 20 ulto
respecting the Wabash and Erie Canal grant2
In referring to the fact of the extension of the Canal to a point
on the Wabash River at Terre Haute, you remark that by refer-
ence &c I will "see that the state has under this act of Congress"
(act of March 2d 1827) "made selections of land in part only
for that portion of the Canal lying between the Ohio State line,
and a point at or near the mouth of Tippecanoe river, leaving
yet to be selected for all that part of the Canal between the Tippe-
canoe and Terre Haute," and you request that I will "direct the
respective Registers of Land Offices" in Indiana, upon your
"filing in their offices a schedule of the lands" you "may select
to suspend the same from sale until the question of the state's
right to them shall be finally determined."
My attention having been called by the President of the Board
of Public Works and by others to this claim on the part of the
state to make additional selections under the said act in conse-
quence of the extension of the Canal,3 I declined acting in the
1 General Land Office, Miscellaneous Letters Sent, Vol. 10, pp. 33-34,
in National Archives, Washington, D. C. Microfilm in Indiana State
Library.
2 Wallace's letter has not been found.
3 Governor Noble's correspondence with the General Land Office
Whitcomb to Wallace, July 26, 1838 145
premises for the reasons presented in my letter of the 11th April
last, a copy of which is enclosed, to the Hon John Tipton and the
Hon O H Smith senators from Indiana, until I could obtain the
opinion of the Attorney General of the U States upon the points
raised touching the construction of the statute and the question
generally as to the extent of the claim of the state to make
selections
I prepared a communication to the Secretary of the Treasury
with a view of eliciting the opinion of the Attorney General on
the case and submitted it to the Indiana delegation with a letter
of the 1st May last of which I enclose a copy — I received a
communication dated the 16th of the same month from certain
members of the Delegation, a copy of which is herewith sent, in
which I was requested to suspend such reference to the Attorney
General or any decision in the premises until those gentlemen
could communicate with the authorities of Indiana in relation
to some additional views of the question &c. The reference was
therefore suspended. As however you have asked for specific ac-
tion involving the validity of the claim I have availed myself of
the first opportunity to act in the matter, in the great press of
business consequent upon the late adjournment of Congress and
have therefore this day submitted to the Secretary of the Treas-
ury a communication for the purpose of procuring the opinion
of the Attorney General on the questions referred to. On the
receipt of the views of that officer such further proceedings will
be had by this Office as may appear to be necessary, of which you
shall be duly advised — 4
Until the reception of the Attorney General's opinion action is
therefore necessarily deferred in reference to your request that I
on the subject is printed in Messages and Papers of Noah Noble, 568-72.
In his message the following December, Governor Wallace discussed
at considerable length the question of Indiana's claim to additional
land. See below, 171-77n.
4 In the opinion of the United States Attorney General, as given on
August 14, Indiana had no claim to additional land for construction
of the canal. House Executive Documents, 25 Congress, 3 session, No.
32, pp. 34-37. The next move was to appeal to President Van Buren. See
below, 175n.
146 Wallace Papers
would instruct the District officers to reserve from sale such lands
as you may select
With &c
Jas Whitcomb Comr.
John Livingston et al. to Wallace1
To HIS EXCELLENCY GOV. DAVID WALLACE
Sir The office of Clerk of the Dearborn circuit court having
become vacant by the recent death of Genl. James Dill, we have
just appointed his son to fill the vacancy until a clerk is elected —
Taking all the circumstances into consideration it is highly
desirable that Mr. Alexander Hamilton Dill should be suffered
to remain in this office for some time to come, to enable him to
settle up his fathers affairs — and having transacted the business
for some time past to public satisfaction, we believe the interest
of the Public will be best subserved by your not ordering an elec-
tion to fill such vacancy until the regular annual election with
respect yours &c2
August 20th 1838 John Livingston
1 Secretary of State file, Archives Division, Indiana State Library.
The body of the document is in the handwriting of either James or
Alexander H. Dill. Realizing that he did not have long to live, James
Dill may have written the request to aid his son.
2 James Dill had been the veteran officeholder of the state, having
served as clerk of Dearborn County since 1813. His death occurred
August 10, 1838, after serving six months of a new term that was
due to expire February 14, 1845. See sketch of Dill in Journals of the
General Assembly of Indiana Territory, 1805-1815 (Indiana Historical
Collections, Vol. 32, Indianapolis, 1950), 966-69.
Governor Wallace also received a petition signed by several hundred
citizens of the county stating it was "his absolute duty" to issue a writ
for an election. He did so on October 1, the election to be held the
following month. It was not until January 26, 1839, that Alexander H.
Dill, as clerk pro tern, certified the election of William V. Cheek on
November 26, 1838; he asked that the certificate be shown Governor
Wallace for his inspection before forwarding the commission. The com-
mission was issued February 1. Cheek was to serve the remainder of
James Dill's term. Election Returns and Record of Commissions issued
by the Executive, 1837-1845, in Archives Division, Indiana State Library.
Pepper to Wallace, August 26, 1838 147
I believe the public interest will be as well consulted by the
above delay as if the election were sooner ordered.
M. C. Eggleston
We concur in the above opinion
Dunn & Spooner
Charles H Test
Danl Major3
Abel C. Pepper to Wallace1
Office Superintendent Emigration of Indians,
Logansport, August 26, 1838
Sir — From information derived from the late report of Gen.
Morgan assistant superintendent, and other sources of undoubted
respectability, I am fully satisfied, that the temper and conduct
of the Indians and white men on the late Pottawatamie reserve
at Yellow river, manifest hostile feelings and portends hostile
action, which there is too much reason to fear will eventuate in
the shedding of blood. To prevent which, I have to request that
your Excellency will authorize some capable and efficient officer or
citizen, to accept the services of one hundred volunteers, and to
furnish him with such orders and instructions as to your Excel-
lency may seem expedient and proper.2
I am, sir, very respectfully, Your Excellency's ob't serv't,
A. C. Pepper,
Indian Agent and Superintendant
His Excellency, David Wallace, Governor and Com-
mander in Chief of the Militia of the State of Indiana
3 Livingston was probate judge of Dearborn County, Eggleston was
presiding judge of the circuit, Test had been presiding judge in another
circuit, and Major was notary public in Dearborn County. See Executive
Proceedings, 1816-1836, Index.
i Senate Journal, 1838-39, p. 715.
2 See below, Pepper to Wallace, October 2, 1838, and the reference
to the removal of the Potawatomi made by the Governor in his message,
180-81.
148 Wallace Papers
Beale Butler to Wallace1
Indiana Wayne County the 10th of the 9th mo 1838
Friend David Walles Governor of the State of Indiana
After my Respects to thee I must inform thee that for Good
Reasons best none to my self I resine all pretentions to the office
of Asociate Judge for Wayne County,
thine with Respect
Beale Butler2
[Endorsed:] Issue a writ of Election to Wayne County f[or]
to elect an associate judge for the county — Septr 18th 1838
David Wallace
Abel C. Pepper to Wallace1
Office Superintendent Emigration of Indians,
Logansport, October 2, 1838
Sir : I have the honor to report that the authority given to the
Hon. John Tipton, to accept the services of volunteers to fulfil
the object of my requisition upon your excellency of the 26th of
August, 1838, was executed by him in the organization of the
force required, and in its subsequent command, in a skilfull, dis-
creet, energetic, and efficient manner.
Your excellency's purpose in complying with the requisition, it
should be known, was to prevent an apprehended collision between
the white settlers and the Indians, on the late Pottawattamie re-
serve, which was threatened by the language and conduct of
both.
Previous to the arrival of the volunteers at the chapel, on the
29th of August, I had assembled two or three hundred old men
and warriors, and was sitting in council with them, when Gen.
Tipton and the force under his command reached the place. I
1 Secretary of State file, Archives Division, Indiana State Library.
2 Butler had first been elected associate judge in 1829 to fill a
vacancy, then was re-elected in 1830 and in 1837 for seven-year terms.
David Hoover was elected October 22, 1838, to fill out this second term.
i Senate Journal, 1838-39, pp. 730-31.
Pepper to Wallace, October 2, 1838 149
had explained to them that an attempt on their part to resort to
violence against their white neighbors, would be attended with
fatal consequences to themselves. I had urged the chiefs and head
men to control the conduct of their young men, and prevent them,
if possible, from committing any acts of violence; and promised,
that as far as my authority and presence would prevent it, the
white men should not be the first to raise the tomahawk.
The chiefs replied with great apparent sincerity, that it was
their wish to be at peace and to prevent blood shed, but they had
not the power to control their young men ; and they feared, if I
did not remain with them all the time, some mischief would be
done. I told them that official duties required my presence in
the states of Illinois and Michigan, as well as in Indiana, alter-
nately, and that it would be wholly inconsistent with the discharge
of those duties, for me to remain many days with them.
At this stage of the council Gen. Tipton arrived, and upon my
requesting the Indians to listen to what he would say to them,
he addressed them in a speech of considerable length. After the
conclusion of his speech, and the replies to it by several of the
head men, it became apparent to me that nothing could prevent
serious difficulties between the contending parties, but the removal
of the Indians from the lands claimed by white men as pre-
emptioners under the late law of Congress.
Gen. Tipton concurred with me in the above opinion, and by
his co-operation and skilful efforts, aided by the good conduct of
the volunteers confided to his command by your Excellency, all
the Indians except three or four fanatical old men, were induced
to give their assent to an immediate removal to the country
assigned to them by the United States west of the Mississippi.
Gen. Tipton having reported to you his operations under your
authority,2 in detail, it would seem unnecessary that any thing
more should be added, except that the public interest, peace, and
security of the citizens of Indiana, as well as the future welfare
of the Indians, seemed to call loudly for the measures adopted by
your Excellency, and executed with signal success.
- See below, 180-81n.
150 Wallace Papers
Herewith I have the honor to transmit a copy of Mr. Waters'
statement in writing, relative to the bad temper of the Indians, as
manifested by the attack made upon his house.
I am, sir, very respectfully, Your Excellency's Obedient servant,
A. C. Pepper, Superintendent
His Excellency, David Wallace, Governor and commander
in chief of the militia of Indiana
[Enclosure]3
Menominie's Village,
August, 1838
Gen. A. Morgan, Assistant Superintendent
Sir — In answer to your request that I should state to you in
writing what I had heretofore stated verbally, concerning the
assault made on my house in the night time, by the Indians, I
certify, that I am one of the many who have settled on what is
commonly called "Menominie's Reserve." And previous to any
serious disturbance between the settlers and the Indians, a num-
ber of the Indians in the night time came to my house and
attempted to get in. I forbid them and braced my shoulders
against the door, and handed them tobacco, to pacify them. They
yelled and made much parade — taking my axe, forced it into the
door shutters, and retired. I do not recollect the precise day.
It was immediately previous to the first wigwam being burned.
(Signed,) Joseph Waters
Attest, J. B. Duret, Jer. Grover, Adam Vinneage, W. H.
Osterhot, Jeremiah Muncy.
3 Senate Journal, 1838-39, p. 717.
George Cline to Wallace, November 12, 1838 151
George Cline to David Wallace1
Valparaiso, November 12th 1838
Hon. David Wallace, Governor of
the State of Indiana,
Sir Having been elected at the August election for the year
1838 to Represent the counties of Porter & Lake in the next
Legislature of the State of Indiana, and having omitted to Resign
my commission that I then held as sheriff of Porter County, believ-
ing that it was not necessary in as much as my term of service was
about to expire, and having since fully satisfied myself that it is
a duty imperiously injoined upon all Commissioned officers, who
are commissioned by authority of the State of Indiana, before they
are entitled to a seat in either branch of the general Assembly
of Indiana, to Resign their Commission previous to their Election.
I therefore tender to you the Resignation of my seat as such
Representative which you will please to accept and cause an elec-
tion to be held immediately to fill the Vacancy.
With due Respect Your Most Obdt Servt
George Cline
[Endorsed:] Accepted Nov 19th 1838 Issue writ of Election
to the Counties of Porter & Lake to Elect a Representative for
those counties — to fill the vacancy made by the resignation of
Geo. Cline — and from the day on the 1st Monday in December
next— Nov. 19, 1838.2 D. Wallace
1 Secretary of State file, Archives Division, Indiana State Library.
2 The return of this election has not been found, but Cline was ap-
parently re-elected as he was sworn in as representative on December
14, 1838. House Journal, 1838-39, p. 111. Charles G. Minnick had been
elected sheriff at the August election in 1838 and was commissioned
August 27. Election Returns, August, 1838, Archives Division, Indiana
State Library.
152 Wallace Papers
Wallace to Committee on Arrangements for Opening
Madison and Indianapolis Railroad1
Indianapolis, Nov. 23, 1838
Gentlemen — I regret exceedingly that it will not be in my
power to participate with you in the festival to be given on the
occasion of opening the regular trips of the cars on the Madison
and Indianapolis Rail Road.2 The near approach of the session
of the legislature, and the duties devolving upon me in conse-
quence thereof, forbids me the pleasure of being one of your num-
ber on so signal and glorious event. — But though absent, be
assured that I shall be with you in heart and in sentiment, and
shall exult as sincerely over this first display of Indiana energy
and enterprize as if I were personally present. The citizens of
Madison are right — right in the strictest sense of the word. They
have indeed, achieved a transcendant victory, and have resolved
as I think most appropriately to celebrate it. They have been
battling long and manfully for the improvement, not simply of
their town, but of their country, and of their state; they have
stood forth unshrinkingly in the front line of the contest from the
beginning; and now, that the dawn of success is bursting upon
them, why should they not be among the first to send up the
thrilling shout of triumph, to cheer and animate their co-laborers
in other parts of the field ! That shout, believe me, will cheer
and animate them ; and will, I confidently predict be responded
to, from other points in tones as deep, as loud, and as spirit-'
stirring.
i Indianapolis Indiana Journal, December 15, 1838.
2 The celebration heralded the opening of the Madison and Indian-
apolis Railroad as far as Graham's Fork, a distance of seventeen miles
from North Madison. A locomotive, purchased from Baldwin & Com-
pany in Philadelphia, was shipped by way of New Orleans, but when
the carrying ship ran into a storm, the locomotive was thrown over-
board. Not wanting to disappoint the guests invited to the celebration,
a locomotive was borrowed from the Louisville and Portland Railroad
Company at Louisville. It was sent by boat up the Ohio River and then
hauled up the Madison hill by five oxen. On the day of the celebration,
the more important of the guests were given a ride to the end of the
line and back, after which a banquet was served in Madison. Sapping-
ton, "The Madison and Indianapolis Railroad," in Indiana Magazine
of History, 12(1916) :236-42.
Wallace: Message, December 4, 1838 153
Permit me, Gentlemen, through you, to present to the citizens
of Madison, my humble thanks, for their tender of hospitality on
this occasion of their Internal Improvement Jubilee — for the many
acts of kindness and friendship which I have received at their
hands, and the firm assurance of my warmest wishes for their
continued success and prosperity individually and collectively.
With great respect, Believe me, Gentlemen, Your friend and
ob't serv't
To the Committee, &c. David Wallace
Wallace : Message to the General Assembly1
[December 4, 1838]
Gentlemen of the Senate, and of
the House of Representatives:
You have been sent up to this place, by the people of Indiana,
charged with the execution of most important trusts. The great
interests of the State, be they civil or political, are almost exclu-
sively in your keeping; and never before — I speak it advisedly —
never before, have you witnessed a period in our local history that,
more urgently, called for the exercise of all the soundest and best
attributes of grave and patriot legislators than the present. Ex-
treme prudence and foresight — frugality and economy — decision
and energy — promptness and perseverance, should unquestionably
mark the whole tenor of your future conduct and legislation ; for
1 Senate Journal, 1838-39, pp. 8-27; House Journal, 1838-39, pp. 14-35.
Editorial comment on the message varied greatly, according to the
politics of the editor. The Madison Courier described it as a "lucid,
business-like document, free from that labored effort at official pomp
and style." The Governor "unrolls the political map of our State before
us, carefully presenting ... its darkest features, and after allowing
sufficient time for contemplation, exhibits the fairer portion. . . ." To
the editor of the Indiana Democrat, it was the most miserable production
ever delivered in any state in the Union. "The style ... is wretched,
even puerile, and the minute calculations must have been formed upon
a deep and close application to Little's Arithmetic." He then went on
to criticize it paragraph by paragraph. Madison Courier, quoted in
Richmond Palladium, December 29, 1838; Indianapolis Indiana Democrat,
December 8, 15, 1838.
154 Wallace Papers
it is by these only that success can be insured to our splendid
enterprizes — a speedy and adequate realization of profit to our
many burthens and expenditures, and above all, an unabated con-
fidence in our own ability and resources. The truth is — and it
would be folly to conceal it — we have our hands full — full to
overflowing! and therefore to sustain ourselves — to preserve the
credit and character of the state unimpaired, and to continue her
hitherto unexampled march to wealth and distinction, we have
not an hour of time, nor a dollar of money, nor a hand employed
in labour, to squander and dissipate upon mere objects of idleness,
or taste, or amusement. On the contrary, we have the most press-
ing need for the whole of them ; nor this only, Ave require that
they should be concentrated as much as possible, and skillfully
and energetically applied to the great business in hand. If such
a result can be brought about — and I see nothing but the illiberal
opposition of local or individual interests to prevent it — I have
no hesitation in saying that Indiana is still safe, and that she must
and will ultimately triumph.
To make these things sufficiently manifest, it seems to me, both
right and proper, that we should attempt here what some perhaps
would call a species of political reckoning: in other words, that
we should carefully endeavour to cast about us in view of ap-
proaching difficulties, to ascertain, if we can, our true position,
the exact measure of our strength — embracing as it must the full
extent of our several means and resources. Such an exhibit, it is
very evident will, better than any thing else, prepare the people
to act with the necessary prudence, to decide upon the best meas-
ures, and to fortify themselves, and the state, most successfully
against the severest shocks of any and every trial.
In the prosecution of so desirable a scheme let us, ere setting
out, accurately determine, first, what the present liabilities of
the state amount to ; and, secondly, what sums must be annually
raised to meet or liquidate the demands accruing therefrom. By
referring to the reports of our canal fund commissioners we learn
that the state has borrowed for internal improvement purposes up
to the first of January last, three millions eight hundred and
twenty seven thousand dollars: one million three hundred and
Wallace: Message, December 4, 1838 155
twenty-seven thousand for the Wabash and Erie canal, and the
remaining two and a half millions for the benefit of our other
works. Upon the whole of this sum, with the exception of a
hundred thousand dollars, the state pays an annual interest of five
per cent. — for the hundred thousand she pays six per cent. —
which makes her interest account alone, for 1839, amount to one
hundred and ninety-two thousand three hundred and fifty dollars.
This therefore, in part, furnishes an answer to our second query,
inasmuch as this is the sum to be provided for and paid by the
state, not only for the coming, but for many succeeding years.
With this knowledge before us, the question — the important
question ! forcibly presents itself, what provisions have we or our
predecessors made to enable us to discharge so considerable a
burthen ? Independent of taxation, I confess that I can name but
two items : first, the interest arising from the balances due upon
the sales of canal lands ; and, secondly, the proceeds of the third
instalment of the surplus revenue; both amounting to not more
than forty-five thousand dollars, which subtracted from the one
hundred and ninety-two thousand three hundred and fifty dollars,
leaves a deficit of one hundred and forty-six thousand eight hun-
dred and fifty dollars to be levied out of, or charged upon, the
pockets of the people.
If this developement does not startle or astonish, it should at
least, it occurs to me, wake us up to a lively sense of the critical
peculiarity of our situation, and of the absolute necessity of our
directing more of our immediate attention and study to our finan-
cial operations than we have hitherto done. It may be asked, and
with the greatest propriety too, is it possible that the sum of forty
five thousand dollars is all that our means, exclusive of taxation,
is capable of producing, or of being applied to the extinguishment
of our yearly burthens? To answer this question satisfactorily it
is requisite that we should examine facts. On the first of January
last, the state had sold canal lands to the amount of 546,804 dol-
lars— 368,000 of which remains in the hands of the purchasers,
subject to an annual interest of six per cent, leaving, however,
178,804 dollars together with 22,070 dollars, the purchasers'
interest for 1838, in the possession of the state for investment.
156 Wallace Papers
The state had also received from the Treasury of the United
States 860,254 dollars — three-fourths of her share of the surplus
revenue — making in all, 1,429,128 dollars. This sum, therefore,
I take it, constituted at the commencement of the present year the
absolute capital capable of productiveness which the state held at
her disposal; 1,061,128 dollars of which we see was money in
hand, or which had been in hand. If properly invested — in bank
stock for example — what should this latter sum have produced?
Not less than ten per cent, or 106,112 dollars, as the operations
of the bank for the same period most undeniably prove: add to
this sum, the 22,080 dollars, the interest on the 368,000 dollars,
and we have 128,112 dollars as the whole amount which might
and ought to have been produced from the states' capital this
year. Yet, so it is, when we come to close our accounts, and to
pay our debts at the end of the year, we find the proceeds of this
capital so disposed of, or the capital itself so managed, that we
can only muster from it 45,500 dollars to apply to our internal
improvement dues. It avails us nothing, I apprehend, to be
told that 44,000 dollars, in addition to the 45,500, has been
realized from the same capital, and distributed among the several
counties of the state for school purposes.2 Our debt has not been
2 The first two installments of the surplus revenue were distributed
to the counties in proportion to the number of taxable tolls. The coun-
ties, in turn, could lend the money to residents of their respective coun-
ties in amounts not exceeding $400 at 8 per cent interest, the interest
payments to be used for the benefit of township schools. The third and
fourth installments of the surplus revenue were to be invested in State
Bank stock in the event that certain additional branches were organized;
otherwise it should go to the commissioners of the Sinking Fund, to
be loaned at the same rate of interest as other funds were loaned. Laivs
of Indiana, 1836-37 (general), pp. 3-14. The fourth installment was
never received. See above, December 18, 1837, for a report on the
amount received and its distribution.
The Senate committee to whom this portion of the message was
referred took the Governor to task for his proposal to divert the income
from the first two installments of the surplus revenue so that it would
be used for internal improvements rather than for education. They
regarded it as "impolitic and unjust" and "adverse to the interest
and feeling of the mass of our population." Senate Journal, 1838-39, pp.
336-38. The House apparently was a little more sympathetic to the
Governor's suggestion, and its ways and means committee reported a
Wallace: Message, December 4, 1838 157
diminished by it; the same heavy deficit of 146,850 dollars still
stares us in the face; and, what is more mortifying than all, the
fact, the humbling fact! that by our miserable mismanagement,
heretofore, there has been lost to the state, this single year, some
38,612 dollars, (the difference between 89,500 dollars actually
realized, and the 128,112 dollars that might have been realized)
thrusts itself upon us, whether we will or no — not to comfort,
not to cheer — but to upbraid and catechise us.
And will a change of position, or the enlargement of our field
of inquiry, so as to embrace within its limits the whole of the
state's means, taxation, and all, better the foregoing results, or
give to our affairs a more comfortable aspect? Let us see: The
value of the entire taxable property of the state for 1838, as
evidenced by the returns of the several assessors, amounts to about
ninety-eight or a hundred millions of dollars : The sum to be
derived therefrom, including 89,000 polls, according to the present
rate of taxation, may, possibly reach 190,000 dollars. On the
supposition then that the current expenses of the state, and the
expense of collecting the revenue, will not exceed ninety thousand
dollars per annum, there will be left one hundred thousand dollars
to be applied to our internal improvement debt.3 But we have
seen that after exhausting all other funds, provided for that pur-
pose, that we are behind hand with this debt 146,850 dollars
— apply the 100,000 dollars to it, and still we are deficit 46,850
dollars. Now need this to have been? Look back for a moment
and reflect. If our actual means had been judiciously invested
and correctly applied — invested and applied as once desired, and
strenuously urged, by a very respectable portion of the friends of
internal improvement — what would have been the probable con-
ditions of the Treasury at the expiration of this same year '39?
Set down the 128,112 dollars, which might have been realized
from the state's means, exclusive of taxation, as just shown, and
bill "applying that portion of the interest on the surplus revenue which
is funded in the several counties, to the payment of the interest on state
bonds." The bill was rejected by a vote of 77 to 19. House Journal, 1838-
39, pp. 281-82.
3 A tabular statement of the assessments made in the various counties
for 1838 may be found in the Senate Journal, 1838-39, pp. 428-31.
158 Wallace Papers
under it the 100,000 dollars, derived from taxation, and their
united sums give the true answer to the question. That is, to be
more explicit, these sums show, first, that we should have had in
the treasury at the expiration of 1839, 228,112 dollars; and, sec-
ondly, that instead of being minus 46,850 dollars, we should have
paid our whole debt, 192,350 dollars, and had a surplus left of
36,762 dollars. Is not this difference a very striking one? It
most assuredly is; and yet it is just the difference we may always
look for between good and bad management. It is not necessary
nor would it be proper, that I should undertake here to explain
the cause of such results. I shall fully accomplish my object if I
can only succeed in presenting our past errors in so distinct a
light as to arouse and stimulate you to the pursuit and adoption
of such measures as may most effectually avoid them hereafter.
Indeed the necessity of so doing will strike you with ten fold pow-
er the moment you reflect that all our plans and operations have
been framed on so large a scale, that, if we attempt to carry them
forward, our present amount of indebtedness must be swelled
within the short space of the next four years, up to the sum of
ten millions of dollars. If, therefore, we hereafter husband our
means and resources no better than we have heretofore done — if
we continue to scatter and divide and dissipate them in the same
wild and reckless manner, how think you shall we ever be able to
meet and liquidate the increasing demands against the state, with-
out unnecessarily pressing the people, shaking their confidence in
our noble enterprize, and blasting, at once, the best hopes and
the brightest prospects of state improvement.
But whilst I am thus compelled to expose so unsparingly the
mistakes of the past, to draw so gloomy a picture of the condition
of the present — with the moral certainty ahead of the rapid
increase of debt and difficulty, things so odious to us all — I take
the utmost pleasure in assuring you, as an offset to these, and as
a guarantee for the future, that the ability of the state, that her
means and resources, if properly disposed of, will and must con-
tinue to augment in a corresponding proportion to the demands
and liabilities that we anticipate against her. Suffer me then to
make this gratifying assurance evident, to marshal before you, as
Wallace: Message, December 4, 1838 159
briefly as I can, the whole of these means, in order, that you your-
selves may determine whether my opinions be well founded or not.
The first item that presents itself to be set down
as constituting a part and parcel of these means, is
the capital Ave have just been considering, amount-
ing, as we have seen, to $1,429,128 00
Secondly, 90,000 acres of Wabash and Erie
canal lands, lying along the line of said canal be-
tween Fort Wayne and Logansport, worth, on an
average, $10 per acre4 900,000 00
Thirdly, 294,624 acres of land more, selected
and to be selected for that part of the same canal
between the Tippecanoe river and Terre Haute,
worth on an average not less than $6 per acre5 1,767,744 00
$4,096,872 00
Fourthly, the fourth instalment of the surplus
revenue, due 1st January, 1839 286,751 00
$4,383,623 00
Does this look like bankruptcy? As though our onward career
must terminate in distress and ruin? Why should it? Here is a
clear unincumbered capital of at least four millions of dollars
absolutely at our disposal. A capital that, invested either in bank
stock or in loans upon mortgage, must net to the state not less
than eight per cent., or 320,000 dollars per annum. Let the whole
of this be applied to the extinguishment of our debt, and what
would be the result? It would leave, to defray the entire interest
on our anticipated debt of ten millions, only $180,000 dollars to
be raised by taxation, or from our public works. Such being the
case, let us inquire what we may set down the value of our
taxable property at, by 1842, the time when our debt may prob-
ably reach nine or ten millions? This value, the present year, if
4 These lands were included in the Indian reservations located along
the line of the canal ; they would come in possession of the state
whenever the Indian title was extinguished.
5 See below, 175.
IbO Wallace Papers
the assessments had been correctly made, amounts to not less than
one hundred and ten millions of dollars; by 1842, we know that
six millions of acres of land must be added to the tax list, which,
on the supposition that they will then average what the lands
subject to taxation now average throughout the state, (ten dollars
per acre,) we shall have a clear addition of about sixty millions
of dollars to the present sum of our taxables. Leaving the in-
crease of personal property out of view altogether, still the facts
show that we may reasonably calculate on having in the state by
1842, 170 millions of taxable property. Even at the present rate
of taxation, this amount would produce 255,000 dollars — add the
tax on 100,000 polls, 50,000 dollars, and the whole revenue col-
lectable for 1842 would be in the neighborhood of 305,000 dol-
lars;6 deduct 105,000 dollars for expenses of collection and the
state government, and we should still have 200,000 dollars to
appropriate to the sinking of our debt: more than sufficient to
pay the 180,000 dollars required from taxation, or from our pub-
lic works.
But the whole of these estimates and calculations, you will per-
ceive, are based upon the supposition, that you will take immediate
steps to render the foregoing means productive, by investing them
as speedily as possible in the most profitable funds. To this end,
therefore, I respectfully recommend that the 200,000 dollars,
already derived from the sale of the canal lands be converted into
bank stock ; and, that the remaining unsold lands be disposed of,
as early as they well can be, without endangering their sacrifice,
and the proceeds, as soon as received, invested in the same way.
For nothing to me can be clearer than, that so long as the state
can borrow at 5 per cent., and can invest her own funds at 8 and
10 per cent., that it would be, not only the extreme of misman-
agement, but the excess of folly in her, not to do it. But, perhaps,
I may be told that we shall not be able to convert our lands into
6 The Governor's estimate proved to be lower than the amount of
revenue received by the state for the year 1841-42, which was $393,248.
See report of Treasurer of State, November 22, 1842, in Documentary
Journal, 1842-43, House Doc. No. 2. The General Assembly did not act
on the Governor's suggestion to convert the money received from canal
lands into bank stock.
Wallace : Message, December 4, 1838 161
money immediately ; that one portion of them is still unredeemed
from the thraldom of the Indian title: true, but then is there no
way to provide an antidote for all this? Suppose you increase the
bank capital another million of dollars, and apply the profits to
make good the deficiencies that may result from such a contin-
gency, see you not how completely the object would be attained
by it? Indeed I am not so certain but that this would be the
better policy, even if the state could dispose of her lands now ; for
all I think will admit that the longer they are withheld from
sale, in consequence of the rapid increase of population and im-
provement around them, the greater will be their value.
Thus far scarce an allusion has been made to our public works ;
the probability or improbability of receiving any thing from
them, in the meantime, has formed no part of any one of the
preceeding calculations. Are they to be lost sight of? Are they
to be set down as nothing? Not if we are permitted to judge
from present appearances. For by looking to their present state
of forwardness, we find ninety miles of the Wabash and Erie
canal ; thirty-one miles of the White-water canal ; twenty-three
miles of the Indianapolis division, and twenty miles of the South-
ern division of the Central canal; twenty-two miles of the Madi-
son and Indianapolis rail road ; and forty-one miles of the New
Albany and Vincennes McAdam road, all completed and ready
for navigation or use in the spring. We find, furthermore, that
there are now under contract fifty-five miles of the Wabash and
Erie canal ; twenty-four miles of the White-water canal ; forty-
three miles of the Central canal ; twenty-five miles of the Cross-
cut canal; seven miles of the Erie and Michigan canal; the grad-
ing of twenty-seven miles of the Indianapolis and Lafayette road ;
fifty-three miles on the Jeffersonville and Crawfordsville road ;
twenty-six miles on the New Albany and Vincennes road; and
four miles on the Madison and Indianapolis rail road ; making,
altogether, an aggregate of two hundred and twenty-seven miles
of canal, rail and McAdam road completed, and two hundred
and sixty-four miles now under contract; besides the dam and
lock and all the improvements necessary to overcome the ob-
162 Wallace Papers
structions at the rapids of the Wabash river.7 Facts, certainly,
which most cheeringly demonstrate that let our legislative supine-
ness, or improvidence, or mismanagement, be what they may,
that neither the board of internal improvement, the engineer de-
partment, or the contractors and laborers engaged upon the works,
can be charged with like defaults, or with having been wanting
in any of the essential requisites of energy, or industry, or per-
severance. Why if the same spirit, the same energy, and the same
perseverance — with a little better management — be only kept up,
we may confidently assert that by 1843, the Wabash and Erie
canal, at least to Covington, if not farther ; the White-water
canal to Hagerstown ; the Central canal from Evansville to the
feder dam on White river, and from Martinsville to the Wabash
and Erie canal; the Cross-cut canal; the Madison and Indian-
apolis rail road and the New Albany and Vincennes McAdam
road, will all be completed and in full operation ; besides, consid-
erable portions of the Erie and Michigan canal ; the Lafayette and
Indianapolis, and the Jeffersonville and Crawfordsville McAdam
roads. Can it, therefore, with the least shade of propriety, be said
that nothing can or ought to be expected from them in the
mean time ; in a word, that they are to be only a burthen and an
expense to us? Strange if it wTould !
I have now finished, as briefly as I could, what I promised in
the beginning — to endeavor the ascertainment of our true position
— the exact measure of our strength — embracing the extent and
character of our several means and resources. The facts, the con-
clusions, and the recommendations growing out of them, I leave
with you that you may dispose of, or give to them whatever
weight or consideration your better judgments may dictate. I
proceed in the next place to examine the mode or manner in which
our public works have been prosecuted. Unless I greatly err, the
spirit of economy may be permitted to enter here and become a
" For a detailed report on the various internal improvement projects,
see the report of the principal engineer in Senate Journal, 1838-39, pp.
253-93. The report of the Board of Internal Improvement, December 20,
1838, also traces the progress made on the various lines of improvement.
It is printed below.
Wallace: Message, December 4, 1838 163
reformer to a very considerable extent; many useless expenditures
may be avoided, and the system conducted in such a way as to
render the works more speedily productive, and consequently less
burthensome to the people. And here permit me to remark, that
my views on this branch of our inquiry have undergone no
change. The plan I suggested twelve months ago in the address
I had the honor of delivering from this place on taking the execu-
tive chair I still adhere to — Indeed experience since has only con-
firmed me in it the more strongly. What was it? It was simply
"to concentrate" (for I repeat the same language) "the means
of the state on portions of each work, at the same time com-
mencing at the most profitable and commercial points to be desig-
nated by the legislature or the board of internal improvement ; to
complete these portions respectively before others are touched ;
and as soon as completed put into use in order that the state may
be realizing something from them, whilst she is in the act of
finishing the remainder." Was this plan adopted? Has it been
acted on ? The very reverse. Cast your eyes over the map of the
state, and you will find portions of many of the works under
contract remote from each other, so much so that in some in-
stances it will require the labor of two or three years to connect
them together. What must be the consequence? Why that the
money expended upon them must remain just so much dead capital
until the connection between them can be effected. But my plan
obviates these objections in a great measure. The same extent
of work would be completed by it in the same time; but with this
marked difference — that while the latter portions are completing,
the first portions completed would be in use, gathering tolls and
benefitting the country through which they pass. Am I asked
to designate a course that would likely lead to such a result ? To
point out the steps by which a reformation can be safely effected ?
I propose and recommend, first, that the board of internal im-
provement be re-organized ; that it be made hereafter to consist
of but three members, to be elected by the legislature, regardless
of locality or place, with a fixed salary each of fifteen hundred
dollars per annum; that it be made the duty of one of them to
take charge of the Erie and Michigan canal, the Wabash and
164 Wallace Papers
Erie canal to Logansport, to superintend the sales and collection
of the interest on canal lands; and, that the other two have the
care of the remaining works divided between them. Give to this
board also the power of employing and fixing the pay or salaries
of engineers. The board as at present constituted costs the state
eleven thousand four hundred and ninety-seven dollars and fifty
cents; as I propose to constitute it, it would cost only four thou-
sand five hundred dollars a year — showing, in favor of the latter
proposition, a saving to the state of near seven thousand dollars
per annum.*4 Secondly, that the several corps of engineers be so
8 An act to modify the plan of carrying on the public works, passed
at this session, dissolved the Board of Internal Improvement of nine
members, as of March 1, 1839, and created a new board of three mem-
bers, to be chosen by a viva voce vote of the two houses of the Assembly
for three-year terms. A chief engineer was to be chosen in the same
manner and for the same term. The terms of the members of the first
board were to be staggered.
In carrying the public works to final completion, the board was to
review "the probable ultimate expense of the entire system and of each
work; the resources of the state; the condition of the money market,
and the market prices of the Indiana state bonds" in order to "deter-
mine the amount of money which may wisely and beneficially be expended
annually . . . without affecting injuriously the agricultural interests
of the state by oppressive taxation or by inducing a serious competition
in the price of farming labor." The amount to be expended in any one
year was limited to $1,500,000.
In deciding which works should have the priority, the board was
requested "to concentrate future expenditures on such works and portions
of works as . . . will best subserve the general convenience of the
citizens and conduce to the agricultural and commercial improvement
of the state; and as will be likely to yield a revenue to the state at the
earliest day, so as to relieve the people from taxation without jeopardiz-
ing the final completion of the works." With the consent of the con-
tractor, they could cancel or transfer contracts from one work to another
whenever they considered it desirable to prevent "an unprofitable outlay
of public funds." Laws of Indiana, 1838-39 (general), pp. 3-8.
The election for members of the new board was held February 8,
1839. Samuel Lewis, John A. Graham, and Noah Noble were elected.
On drawing lots to determine their length of service, Lewis drew the
three-year term, Noble, two years, and Graham, one year. House Jour-
nal, 1838-39, pp. 512-15.
By not designating which lines of improvement should be given
priority, the General Assembly left in the hands of the board the delicate
problem of dropping various works, at least for a time. They were
certain of receiving criticism whatever they did.
Wallace: Message, December 4, 1838 165
organized by the principal engineer that but one corps be allowed
to each work. If this measure can only be carried, two important
results must follow: first, a great diminution of expense to the
state, and secondly, the prosecution of each work systematically.
For then the board would be compelled to complete as they
advanced and to concentrate the means of the state in the manner
I have suggested. Had this rule been established in the beginning
the scattering system, as some have called it, could never have
been acted on.9
If these measures be adopted, and the means of the state hus-
banded, invested, and applied, in the manner I have proposed,
the state, I feel assured, need apprehend but very little danger or
difficulty. She will be able, amply able, to finish her present
undertakings and to do something, in the meanwhile, for that first
and most meritorious work which is now so rapidly going to
decay — the Michigan road. Too much money has been already
expended upon this road to throw it aside entirely; besides its
importance and advantage to the country at large are decidedly
too great to suffer it to sink into obscurity or neglect. If, there-
fore, you cannot apply to it the whole energies of the state and
McAdamize it at once, may you not take steps to keep it in
repair — to make it passable until you shall be able to take hold
of it efficiently — requiring every improvement made upon it to be
made with an eye to its future completion ? This, I think you
may safely do, and that too, without subjecting yourselves to the
obnoxious charge of extending the system.10
9 The chief engineer was to have the immediate direction and control
of the engineer corps, subject to the general orders of the board. Resi-
dent engineers would be assigned to each work. Laics of Indiana, 1838-
39 (general), p. 6. Jesse L. Williams was elected principal engineer
by the legislature. House Journal, 1838-39, pp. 515-16. The Aurora
Dearborn Democrat, June 27, 1839, complained that the "aristocratic"
Board of Internal Improvement was turning out of office Democratic
engineers of real ability and replacing them with "federal" ones that
were not as competent.
10 The Michigan Road was built during the years 1831 to 1835 with
the proceeds from a Federal land grant made in 1826. Following its
completion, the upkeep of the road was assigned to those counties through
which it passed. Apparently it was not taken care of, especially in the
northern part, where the editor of the Richmond Palladium found it
166 Wallace Papers
The sum appropriated by the internal improvement bill to the
construction of the Madison and Indianapolis rail road is now
nearly exhausted; so much so that to prosecute it farther, or even
with the requisite energy, an additional appropriation becomes
necessary. That this will be done, I cannot for a moment permit
myself to doubt. It would speak but poorly indeed in behalf either
of the wisdom or stability of the state to refuse it.11
Having alluded to our state bank, and having repeatedly inti-
mated that we might probably use it as an instrument to relieve
the people from the threatened burthen of taxation, prudence sug-
gests, however, before the adoption of such a measure, that we
carefully scrutinize its capacity for such employment. Especially
so as experience teaches us the fearful lesson that there are limits,
beyond which, if banking privileges and banking operations are
carried, they cease to do good and become engines of incalculable
mischief. Indeed, I think, I express no more than the common
sentiment of the people of Indiana, when I say, that I would
much sooner submit to the inconveniencies of increased taxation
almost impassable. "The mails cannot be transported with any regularity,
and for the greater part of the year, stages do not pretend to go at all."
Quoted in Logansport Herald, October 19, 1837. A select committee of
the Senate, after pointing out the importance of the road, reported a
bill for its improvement north of Napoleon. No further action was taken
on the measure. Three separate bills were introduced in the House for the
improvement of the road; none of them progressed to second reading.
A fourth bill, to repair the road, passed the House but was lost in the
Senate. Friends of the road made a final attempt to get money for its
repair by adding an amendment to a joint resolution regarding the
Lawrenceburgh and Indianapolis Railroad, but this too failed. Senate
Journal, 1838-39, pp. 153-55, 663-64, 6S6; House Journal, 1838-39, pp.
323, 366, 406, 530. For a general history of the road, see Geneal Prather,
"The Construction of the Michigan Road, 1830-1840," in Indiana Maga-
zine of History, 40 (1944) :243-79.
ll The General Assembly appropriated an additional $400,000 for
construction of the railroad; the money was to be borrowed by the Fund
Commissioners on the credit of the state in the same manner that other
money had been borrowed for internal improvements. Laius of Indiana,
1838-39 (general), p. 77. David H. Maxwell, president of the Board of
Internal Improvement, estimated the total cost of the railroad from
Madison to Indianapolis, graded for a double track, with a single track
laid down, at $2,407,342. Previous appropriations for the road totaled
$1,050,000. Senate Journal, 1838-39, p. 545.
Wallace: Message, December 4, 1838 167
than to see the state for a single hour flooded with depreciated
or irredeemable bank paper, the offspring of our own institutions.
In attempting therefore to escape from, or elude the one evil, it
becomes us you see to be exceedingly careful not to call down
upon ourselves the other.
My recommendations would perhaps in the course of time, lead
to the addition of some four millions of dollars to our present
bank capital. Would this be too much ? Would this in other
words be more than the reasonable wants of the community
require? More than would be necessary to keep up and maintain
a sound and healthy action in and between the various depart-
ments of our agricultural, mechanical, and commercial interests
throughout the state? For beyond this we ought not to go. In
attempting to answer these questions, I confess that I find myself
circumscribed by very serious difficulties. The most important
facts — facts too, without which no correct decision can be had —
are not within my reach ; no steps having been heretofore taken
either to gather or treasure them up. Who, for example, can tell
me the probable amount of our exports or imports, the past or
present years? Who the amount even of our agricultural produce,
the bases of all our wealth, the bases upon which all sound and
safe calculations, at least so far as Indiana is concerned, can
alone be made to rest? No one. In truth, throughout this wide
field there are but two facts observable that shed any, the least,
light upon this subject ; and these are the sum total of our popu-
lation, and the aggregate of their wealth, all else connected with
them is more or less wrapt in the mists of doubt and uncertainty.
Hence the enquiry resolves itself at once into this; will a popula-
tion of 700,000 inhabitants possessed of property, the estimated
value of which is one hundred and ten millions of dollars, justify
the establishment of a bank capital of six millions of dollars? I
think they will; and it would be no difficult matter to sustain this
opinion, by the experience of sound banking operations in other
states, did time and the occasion permit. But lest in this, there
might be error, I would recommend that the increase be gradually
made, and that steps be taken in the meantime to procure the
necessary information, such as I have just named, to enable you
168 Wallace Papers
to graduate this increase judiciously, and to stop short of the
limits which common sagacity and prudence may designate. For
I hope never to hear it charged to Indiana that she converted her
banks into swindling shops, or that she countenanced fraud or cor-
ruption, in any shape, form, or manner, whatever.12
By the courtesy of one of its officers — for the charter gives the
executive no right to call on the bank officially for information —
I have been permitted to learn that the operations of the bank
have enabled her to make an annual dividend of ten per cent. ;
that after paying the interest on the amount of the capital bor-
rowed— 1,360,000 dollars — she has accumulated a sinking fund
of 276,086 50 cents.13 Facts certainly which connected with
this other one — no less gratifying to our state pride — of the
acknowledged credit and solvency of the institution, speak not
only loudly in its behalf, but augurs well for it in the future.
12 The Senate committee on the State Bank reported in favor of
increasing the state's stock in the bank not only because it would aid the
agricultural, mechanical, and commercial interests of the state, but
because it would provide funds to pay the interest on the internal im-
provement loans. An act was passed authorizing an increase in the
stock of $1,500,000 in 1839 and $700,000 in each of the five succeeding
years, for a total of five million by 18+4. The money was to be borrowed
at a rate of interest not to exceed 6 per cent. The money borrowed in
1839 was to be invested in stock divided equally among the several
branches, if consented to by the branches. The money so invested in stock
could be lent at the rate of 7 or 8 per cent interest, depending on the
length of time of the loan. The same act provided that four additional
branches were to be located at the discretion of the officers of the State
Bank and the branches. The capital stock of each branch was to be equal-
ly owned by the state and individuals. Senate Journal, 1838-39, pp. 334-
35; Laws of Indiana, 1838-39 (general), pp. 15-17. The Indianapolis
Indiana Journal, February 2, 1839, reported that the fate of the bill
increasing the stock was problematical because of the opposition in the
Senate to creating any more new branches. It was never possible to carry
out the provisions of the law. For later references to the matter, see the
Index under State Bank of Indiana.
!3 See Samuel Merrill's report on the State Bank, December 7, 1S38,
printed below. To remedy the Governor's complaint about not having the
power to obtain information, the General Assembly passed a joint reso-
lution making it the duty of all officers under the executive department,
the president and directors of the State Bank, and all boards of com-
missioners to give the Governor such information as he might request of
them. Lanvs of Indiana, 1838-39 (local), p. 359.
Wallace: Message, December 4, 1838 169
In addition to the foregoing items, I have also learned that the
present capital of some of the branches requires no increase, while
others do ; that some declare a dividend often and twelve per
cent., while other only divide seven and eight; circumstances
evidently which should not be lost sight of when you are making
provisions for the increase of their capital, or particularly when
you are determining to invest the state funds in their stock.
Policy and expediency both seem to dictate that these funds
should be placed where they would at all times be the most avail-
able. For should the wants and interests of the state at any
future period render the sale of any portion of her stock neces-
sary, it requires not the wisdom of a Solomon to decide that
stock in branches that divide ten and twelve per cent, would sell
readier and command a better price than stock in branches that
divide only seven and eight. The tax payer, too, unless I err
most egregiously, would feel that a profit of ten and twelve
per cent, on the state's capital would occasion a much lighter draw
on his pockets than a profit of seven or eight. Wherefore, I
would recommend, if you resolve upon such investments, that it
be made the duty of the President of the state bank, and the
state directors on the state board, to distribute the state stock,
and to place the state funds especially where they would do the
most good and produce the greatest profit. I would devolve this
duty on those individuals because they can always command a full
knowledge of the capacity and wants of the different branches ;
and above all, because they are elected by the legislature and
would therefore be held more directly responsible to the people.
Now that I am on the subject of the Bank, I seize the occasion
to call your attention to another matter connected therewith. In
their anxiety to guard the people and the public against the evils
which banks unchecked by any supervisory power are but too apt
to generate, the legislature, among other things, enacted "that
when the governor of the state shall have reason to believe that
the charter has been violated, it may be lawful for him to order
a scire facias to be sued out calling on the corporation to show
cause wherefore the charter shall not be declared forfeited." Is
not the discretion of the governor here a little too unlimited?
1 70 Wallace Papers
For what shall constitute the sufficient grounds of his belief?
Mere rumor— the exaggerated reports ; the highly colored repre-
sentations of, perhaps, disappointed or hostile individuals? He
has no authority, recollect, to institute an investigation of any
kind. No matter how fictitious or how unfounded a charge against
the Bank may be, he has no means of finding it out. Indeed, for
aught that appears upon the face of the charter, the credit and
character of the institution together with the vast interests it
involves, are in a greater or less degree at the mercy of the whim
and caprice of the executive. He may constantly harrass it by
suing out one scire facias after another, and always excuse himself
by alleging that he had "reason to believe that the Bank had vio-
lated its charter." Is he anxious to secure an election? What
better expedient can he resort to than to make war upon the
Bank? Is it necessary to shield his conduct or the complexion
of his principles from too severe a scrutiny, how more successfully
can he accomplish this than to join in a crusade against the Bank?
The Bank ! Why hostility to the Bank or Banks has become in
these latter days a kind of universal panacea — a cure for every
disease of political principle ; the vilest leprosy of federalism may
even be made whole by it. With such and so many temptations
before him would it not be safer to limit his discretion some-
what; to define by law the proper sphere of his action — in a word,
to furnish him with an instrument that he may use whenever
charges and complaints are preferred against the Bank to enable
him to determine, before he acts, whether there be any just
foundation for them or not? He himself cannot do this; but you
may ; he cannot propound to it a single question ; but you can ;
you can appoint an agent and clothe him with sufficient power
to make any investigation desired ; you can compel this agent
to report the results of his investigations, both to the Legislature
and the Executive, and to hold himself in readiness to enter at
a moment's warning any Branch whenever so directed by the
Executive, and to examine the grounds of any accusation that
may be lodged with him against it. To me this appears decidedly
the better course ; better for the Bank, better for the people, and
better for the public generally. The Governor would then have
Wallace: Message, December 4, 1838 171
something substantial upon which to fix his reasons of belief —
the facts reported by the examining agent; and, above all, it
would tend to insure a close, cautious and rigid administration
of the bank's affairs. For none surely, with such a rod suspended
over them, would dare for a moment to transcend their powers,
or to practice frauds upon the community. The Bank, I hold,
belongs to the people; was expressly created for their convenience
and benefit, and should on that account be so conducted as to
attain these ends. It ought therefore to be held responsible to
them, and thrown open at any and at all times to their scrutiny
and examination, when sought for in the right way. Indeed I
have no doubt but that the investigations already had have been
of great service both to the bank and the public ; for while they
have rendered its officers more careful and diligent in the dis-
charge of their duties, the Bank has lost nothing in the estimation
and confidence of the people.14
Among the several items which I have enumerated as compos-
ing an important portion of the state's wealth is the 294,624
acres of land estimated, by me, to be worth 1,767,744 dollars.
How this happens, or from what source it springs may possibly
need some explanation. We derive title to it from an act of Con-
gress, passed March 2d, 1827. This act granted to the state of
Indiana, "for the purpose of aiding her in opening a canal to
unite at navigable points the waters of the Wabash river with
those of lake Erie, a quantity of land equal to one half of five
sections in width, on each side of said canal from one end thereof
to the other ; to be disposed of by the legislature of the state,
for that purpose and no other." Subject to the following condi-
tion : "that said canal shall be commenced within five years and
completed in twenty years, or the state shall be bound to pay to
the United States the amount of any lands previously sold." This
grant the state accepted; she commenced the canal within the
five years, and consequently entitled herself to all the benefits
growing out of it. But the act, you perceive, names no certain
quantity of land which the state may take and dispose of ; and
14 No action was taken on this recommendation.
172 Wallace Papers
this is likely to occasion us some difficulty — it merely establishes
the rule by which that quantity may be ascertained : it must be
equal to one half of five sections in width on each side of the
canal from one end of it to the other. The length of the canal
therefore must be the great governing point ; for evidently the
greater the length is, the greater must be the quantity of land
the state will be entitled to. Again, on the score of certainty, the
act is still further at fault, because it neither fixes the navigable
points to be united, nor limits the length of the canal, but leaves
them both open to be afterwards settled by another authority-
The question then occurs, to whom has this authority been given?
Or in other words, in whom is the right to locate the canal
vested? In congress? In the president of the United States? Or
in the state of Indiana? Unquestionably in the latter. The act ex-
pressly gives it to her; for these are its words: "that so soon as
the route of the canal shall be located and agreed on by the state,
it shall be the duty of the governor thereof, or such other person
or persons as may have been or shall hereafter be authorized to
superintend the construction of said canal, to examine and ascer-
tain the particular lands to which the state will be entitled under
the provisions of this act, and report the same to the secretary of
the treasury of the United States." There is certainly no ambi-
guity here. The right of Indiana to locate the canal, and conse-
quently to fix the navigable points, as well as to determine its
length, cannot for a moment be gainsaid. Has Indiana then
exercised this right? Has she in the language of the act located
and agreed on the route of the canal? She has; and as her statute
book shows, she has fixed its terminating point at Terre-Haute on
the Wabash river. — Who then objects to this? or rather, who
has a right to object to this? Congress? The general govern-
ment? Neither. Provided Terre-Haute is at a navigable point on
the Wabash river. Perhaps, it may be asked, are there no reserva-
tions whatever to be found in this act in favor of the United
States? There are two, and but two. "The right of way, and
the alternate sections from one end of the canal to the other to
be selected by the commissioner of the general land office, under
the direction of the president of the United States." But do
Wallace: Message, December 4, 1838 173
these, I ask, give to the commissioner of the general land office,
or to the president of the United States a right to say to Indiana,
thus far shalt thou go and no farther — this shall be the termi-
nating point of your canal and no other; or even to interfere
with her in the selection of the lands? Surely not. The act, so
soon as Indiana complied with the condition precedent — the
commencement of the canal within the five years — gave to each
party a separate and distinct property ; to the United States the
alternate sections; to the state of Indiana a quantity equal to one
half of five sections in width on each side of the canal from one
end of it to the other. Nay more, it appointed separate and dis-
tinct agents to set this property apart — on behalf of the United
States the commissioner of the general land office; on behalf of
the state of Indiana the governor thereof, or the person having
charge of the construction of the canal. Nothing to me can be
clearer than all this. But lest I subject myself to the charge of
taking only a one-sided view of the question, suffer me to present
you with another. The United States have rights in this matter
as well as Indiana. For if any one supposes that this grant was a
pure free-will offering made without any consideration but that of
love or affection, or without any reservation of equivalents what-
ever, commits, to say the least of it, a very gross mistake. So far
from this being the fact, congress carefully reserves the right of
way, free of tolls, from one end of the canal to the other for
the passage of all persons and the transportation of all property
in the service of, or belonging to the United States. Suppose now
that the state completes the canal to Terre-Haute, and takes land
for it only to the mouth of the Tippecanoe ; in other words,
that she unites the waters of lake Erie with those of the Wabash
at Terre-Haute — how could she prohibit the United States from
the use of their right of free way to that point? Where would
she commence charging them with tolls for passage or transporta-
tion? At the mouth of the Tippecanoe? She has not carried the
canal to it. At Lafayette ? At Covington ? The Wabash river
during the months of July, August, September, and October is
not navigable from either of those points. What then ? For here
is a difficulty that must inevitably occur, and that too every year.
174 Wallace Papers
What would be the language of the United States at such a
juncture? You bound yourself, they would say, to Indiana, to
unite the waters of lake Erie with those of the Wabash at navi-
gable points, and to give us the right of free way to them. Have
you done so ? and is either Lafayette or Covington one of these
points? You see they are not, and you know they cannot be for
several months in the year. What reply could Indiana make?
How could she excuse herself for the non-fulfilment of her obli-
gation? By saying that she only took lands to assist her to the
mouth of the Tippecanoe? Why did she not take more? The
grant gave her from one navigable point to the other; nay, to
prevent all foreign interference, it appointed her own public
servants the agents to select and sell them for her. Dont you see
at a glance how very difficult, nay, how utterly impossible it
would be for the state to limit the United States right of free way
short of Terre Haute? What follows then? Why simply this:
that if the United States could claim and enjoy this right of free
way, Indiana can claim and take the lands that were given to her
as the consideration of that right. In fact the General Govern-
ment has virtually acknowledged the soundness of the principles
here contended for, by allowing to Ohio, under precisely similar
circumstances, lands for the extension of the same canal terminat-
ing on lake Erie. I hope I may be pardoned for so minute an
examination of this subject. My only excuse is its importance.
If my conclusions be correct, the state is entitled to near three
hundred thousand acres of land more than she has yet received or
taken ; a property certainly of too much value, and in our present
circumstances, entirely too necessary to strengthen and sustain us,
to be either given up or lost without a struggle.13
15 See the letter of the Commissioner of the General Land Office to
Wallace, July 26, 1838, above. By act of January 23, 1829, the Indiana
General Assembly had adopted the route for the Wabash and Erie
Canal as surveyed by Col. Asa Moore. This placed the western terminus
at the mouth of the Tippecanoe River and Indiana received the alternate
sections of land, or their equivalent, to that point. It was first planned to
use the Wabash River for the navigation of boats up to the mouth of
the Tippecanoe and then use the canal from there to Lake Erie, but it
was not long before a movement was on foot to extend the canal to
Terre Haute. This plan was written into the internal improvement act
Wallace: Message, December 4, 1838 175
The line of this canal extends along the Wabash river from
Terre Haute to the Ohio state line, which, according to the rule
agreed on some years ago between our then canal commissioners
and the commissioner of the General Land Office, entitles Indiana
to take and dispose of 637,304 acres of land, 343,680 acres of
which have been already selected or are in the way of selection —
being for that part of the canal between the Ohio state line and
the mouth of the Tippecanoe river — leaving 294,624 acres to be
selected for that part of the canal between the mouth of the
Tippecanoe river and Terre Haute. The act of Congress, you
will observe, makes it the duty of the governor, or the person
having charge of the construction of the canal, to examine and
ascertain these lands. According thereto, as the governor of the
state, I took to my assistance Messrs. Austin W. Morris, Doug-
lass Maguire and judge William Polke, and during the past
summer selected 73,710 acres of this land, and reported the same
to the Secretary of the Treasury of the United States — postpon-
ing further selections to a future day. These lands lie principally
in the counties of Marshall, Fulton and Kosciusco, and embrace
all the Indian reserves, so called, that have yet been surveyed.
of 1836, and the extended route to Terre Haute surveyed. The State
Board of Internal Improvement then boldly applied to the commissioner
of the General Land Office for permission to select land to cover this
additional length of some ninety miles. Lands contiguous to the route
having already been sold in many instances, the state wished to select
an equivalent of these in other areas.
So far as the General Land Office was concerned, the land grant
authorized by the 1827 act was considered closed. For Indiana to re-open
the question now and claim additional land was a matter not to be
taken lightly. Commissioner Whitcomb, being from Indiana, was no doubt
sympathetic to Indiana's claim, but at the same time he had to look after
the interest of the Federal government. He consulted the United States
attorney general and received the opinion that the state was not entitled
to additional lands. The solicitor general of the Land Office took the
same view. President Van Buren was drawn into the controversy, but
refused to make any decision and referred the matter to Congress. It
was not until February 27, 1841, that an act was passed confirming to
Indiana the land selected by her for that portion of the canal that lay
between the mouth of the Tippecanoe River and Terre Haute. House
Executive Documents, 25 Congress, 3 session, Vol. 3, No. 32; U. S.
Statutes at Large, 5 (1835-45) :41+. In the meantime, Indiana continued
her efforts to obtain a favorable decision on her claim.
176 Wallace Papers
The inquiry may possibly be made, why resort to these lands?
Why not take them on the line of the canal? For the simplest and
best of all reasons : the lands on the line of the canal have long
since been sold by the general government, save 6,723 acres,
which falls to the share of Indiana ; and therefore, the late gov-
ernor, shortly before retiring from office, opened a correspondence
with the present commissioner of the General Land Office, in
which he requested that officer to withhold certain townships and
reserves of land from sale, in order that the state might satisfy
her claim out of them.16 This it appears has been done, and the
lands I have selected are a part of them. However, the Commis-
sioner's reply — in short, the whole correspondence — I beg leave
to refer you to, especially so as the views of the late governor
accord with those I have here advanced. I also take pleasure in
laying before you a joint communication addressed to me from
our entire delegation in Congress, together with the individual
letters of the Hons. William Graham, James Rariden, George H.
Dunn and Albert S. White, upon the same subject.17
In relation to the lands selected, a report of which with the
necessary maps, tract books, &c. will in due time be laid before
you, I have to request that you will provide for the sale of them
at such times, and on such terms, as you may deem most advan-
tageous for the general interest of the state. The third and last
section of the act of Congress making the grant as aforesaid,
authorizes the state, after the selections shall have been made,
under the authority of the legislature, to sell or dispose of the
lands, and to make the purchasers a valid title.18
16 The correspondence is in the Messages and Papers of Noah Noble,
568-72.
17 The correspondence of Congressmen White, Rariden, John Ewing,
and senators John Tipton and O. H. Smith is in the House Executive
Documents, 25 Congress, 3 session, Vol. 3, No. 32.
18 See above, 144-46. A resolution was introduced in the Senate
instructing the judiciary committee of that body to report a bill providing
for the sale of the lands selected by the Governor to aid in constructing
this extension of the Wabash and Erie Canal, but it was tabled. Senate
Journal, 1838-39, p. 365. It was useless to pass any such legislation until
the matter was cleared in Washington as to whether Indiana's claim
would be honored. (See note 15 above.) In the meantime, the Indiana
legislature had to content itself with passing a bill providing that "when-
Wallace: Message, December 4, 1838 177
On entering upon the public lands to make the selections afore-
said, I found the great majority of the finest tracts already occu-
pied by individuals who had settled upon them with a view to the
United States pre-emption law, and who, on the faith of that
law, had made permanent and valuable improvements on them.
To avoid a collision of interests with so meritorious a class of our
fellow-citizens, and to secure to them all the benefits of this law,
I sought to enable myself to make selections elsewhere, by request-
ing the commissioner of the General Land Office to instruct the
registers of the several land offices throughout the state, to with-
hold from sale all lands I might select, on my filing with them
in their respective offices a schedule of the same. This request,
I regret to say, was not granted, which left me no other alterna-
tive, but to continue the selection from the public lands not
brought into market. A copy of my letter, together with the
commissioner's reply, accompanies this communication. However,
in justice to the worthy settlers, I recommend in their behalf
that they have the privilege of purchasing the lands they occupy
at the minimum price the legislature may fix upon them; or, on
failure of that, that some just provision be made to compensate
them for their improvements.
The returns of the assessment of taxable property the present
year exhibit a strange medley of contradictory facts.19 The num-
ber of polls has increased in the ratio we anticipated, being a
fraction over 89,000 ; whilst last year they were but a little over
82,000; in 1837, 6,185,714 acres of land were returned as tax-
ever the Indian title to the public lands . . . shall be extinguished, or a
sufficient quantity thereof to satisfy the claim of the state for the con-
struction of that part of the Wabash and Erie canal lying west of the
Tippecanoe river . . . , the Governor shall be . . . authorized to appoint
an agent or agents, to ascertain the particular lands to which the state
is entitled, and report the same to the secretary of the treasury of the
United States." The Governor was to continue his correspondence with
the General Land Office concerning Indiana's claim to additional land.
Laws of Indiana, 1838-39 (general), p. 58.
19 Wallace's figures regarding assessment differ slightly from those
furnished the General Assembly by the State Auditor. See Senate Journal,
1838-39, pp. 428-40, or Documentary Journal, 1838-39, No. 12, pp. 172-87.
Using Wallace's figures, the decrease in the value of the land from 1837
to 1838 should be $1,238,913 instead of $239,113.
178 Wallace Papers
able, valued at $61,033,425; this year 6,968,796 acres have been
returned, valued at 59,794,512 dollars: shewing an increase of
taxable land of 783,082 acres, and a decrease in the aggregate
value of the whole of 239,113 dollars. Again: the value of town
lots in 1837, was 9,181,443 dollars; this year it is 13,752,148
dollars, being an increase of near forty-five per cent. In 1837,
the value of personal property was 24,724,146 dollars; this year
it is only 22,812,312 dollars; showing a decrease of near two
millions of dollars ! And what is more extraordinary than all, the
corporation stock which, in 1836, amounted to 890,923 dollars,
this year is returned as being only 508,831 dollars; and this, too,
when we absolutely know that the stocks of the insurance compa-
nies, the trust companies, the savings institutions, the bridge and
road companies, with which the state is literally shingled over,
have been greatly increased since that time. What do such facts
prove? Undoubtedly, that the present mode of assessing and col-
lecting the revenue, is wretchedly defective ; and that the returns
of the present year are not to be relied on as furnishing any thing
like correct data. Why, for instance, should the increase of town
property be 45 per cent, this year over last? Can any other reason
be assigned for it than this, that town property has been more
faithfully assessed than property elsewhere? Again: why should
the value of personal property have diminished? The population
has increased finely — our list of taxable polls has received an addi-
tion to it of near 7,000 — yet the whole amount of personal prop-
erty is less this year by near two millions of dollars. It cannot
be said that the value of this kind of property has been affected
by internal improvements, as lands have in many of the counties.
But why ask questions, when the cause is so clearly discernible?
For surely, when so gross, so unpardonable an error can be com-
mitted, in assessing the simple item of corporation stock, which,
of all others, is the easiest to come at, so as to miss one-half or
two-thirds of it, may we not rationally conclude that millions of
other property have been omitted in the same way? I have no
doubt of it: and furthermore, I have no doubt but that if the
whole taxable property of the state had been correctly assessed, it
would have fallen nothing short of one hundred and ten millions
Wallace: Message, December 4, 1838 179
of dollars. No executive recommendation therefore, I presume,
can be necessary to stimulate you to provide a prompt, speedy, and
efficient remedy for such glaring defects.20
In relation to the first and second instalment of the surplus
revenue, which you will remember has been loaned out in the
several counties for school purposes, it occurs to me that sufficient
guards have not been thrown around them to protect them from
destruction or loss. Too much of this fund is out on personal
security. In 1837, of the 573,502 dollars which was loaned,
488,626 dollars of it was on personal and 78,500 dollars on mort-
gage security. This certainly ought not to be. The whole of this
fund should be placed on the latter security: and although the
agents in their returns the present year, show a very considerable
improvement in this respect, yet the legislature should make it
obligatory upon them to take nothing hereafter in pledge but real
estate. Your attention to this matter is respectfully solicited.21
20 The State Auditor in his report said he "doubted whether in any
state the assessments, including the valuation of property, is worse done
than in Indiana. If the present system be persisted in, no calculation
can be made of the amount of revenue to be realized in the Treasury the
coming year. The system is radically defective, and unless remodeled
must ultimately beggar the Treasury." He suggested that some different
mode should be adopted of arriving at the objects of taxation as well
as the value of property to be taxed. Documentary Journal, 1838-39, No.
12, pp. 172-87.
A special committee of the House, appointed to consider the matter,
only affirmed the inequalities in assessments and referred the problem
to the committee on ways and means. For their report of January 14,
1839, see below. An attempt was made by the legislature to improve the
tax system by setting out in detail the land and property that was subject
to taxation and the method to be used in making assessments. Lands
made subject to taxation included Wabash and Erie Canal lands whether
paid for or not, all seminary and saline lands, Michigan Road lands, and
individual Indian reserves. Personal property included stock in any
corporation and state bank stock. No male between the ages of twenty-
one and fifty was to be exempt from payment of a poll tax of SO cents.
Laws of Indiana, 1838-39 (general), pp. 19-28.
Eight members of the House entered their protest against the act in
the legislative journals. They particularly objected to taxing the canal
lands on which final payments had not been made. They also protested
that they had not been permitted to offer amendments to the bill. House
Journal, 1838-39, pp. 585-87. Seven of the eight protestants were Demo-
crats.
21 An amendment to the original act was passed at this session
180 Wallace Papers
By the conditions of the late treaty with the Pottawatamie tribe
of Indians, in Indiana, the time stipulated for their departure to
the west of the Mississippi, expired on the 6th of August last. As
this trying moment approached, a strong disposition was mani-
fested by many of the most influential among them to disregard
the treaty entirely and to cling to the homes and the graves of
their fathers at all hazards. In consequence of such a determina-
tion on their part, a collision of the most serious character was
likely to ensue between them and the surrounding settlers. Appre-
hensive of such a result, and with a view to prevent it, the citizens
of Marshall county, early in the month of August, forwarded to
the Executive a petition praying that an armed force might be
immediately sent to their protection. On the receipt of this peti-
tion I repaired as speedily as circumstances would permit to the
scene of difficulty, in order to satisfy myself, by a personal ex-
amination, whether their fears were justifiable or not. On my
return to Logansport, a formal requisition awaited me from the
Indian agent, Col. A. C. Pepper, for one hundred armed volun-
teers to be placed under the command of some competent citizen
of the state, whose duty it should be to preserve the peace and
to arrest the growing spirit of hostility displayed by the Indians.
This requisition was instantly granted. I appointed the Hon. John
Tipton to this command, and gave him authority to raise the
necessary number of volunteers. He promptly and patriotically
accepted the appointment ; and although sickness and disease pre-
vailed to an alarming extent throughout northern Indiana, yet
such was the spirit and patriotism of the people there, that in
about forty-eight hours afterwards the requisite force was not
only mustered but was transported into the midst of the Indians
before they were aware of its approach, or before even they could
possibly take steps to resist or repel it. This rapidity of move-
ment; the known decision and energy of General Tipton, backed
by his intimate acquaintance and popularity with the Indians,
whom it was his business to quiet, accomplished every thing
appointing agents for loaning and managing the surplus revenue allo-
cated to the different counties, requiring them to give bond, and outlining
their duties and compensation. Nothing was said about the security to be
offered by the borrowers. Laivs of Indiana, 1838-39 (general), pp. 30-33.
Wallace: Message, December 4, 1838 181
desired. The refractory became complacent; opposition to removal
ceased ; and the whole tribe, with a few exceptions, amounting
to between eight and nine hundred, voluntarily prepared to emi-
grate. General Tipton and the volunteers accompanied them as
far as Danville, in Illinois, administering to them, on the way,
whatever comforts and relief humanity required ; there they were
delivered over to the care of Judge Police, and the U. States
removing agents. Copies of all the communications and reports,
made to the executive, by General Tipton, while in the discharge
of this duty, I lay before you, from which I feel assured you will
discover, with myself, that much credit and many thanks are due,
not only to him, but to all who assisted him, in bringing so deli-
cate an affair to so happy and successful a termination.22
The act providing for the appointment of a State Geologist,
not having expired, I renewed the commission of Mr. David Dale
Owen, early in the spring. The results of his examinations, the
past year, are highly gratifying. The mineral deposits, in the
western part of the state, are found, not only to be extensive, but
of the very first quality. The counties of Vermillion, Parke, and
Fountain, appear to be peculiarly rich in stone coal and iron ore.
In Vermillion, preparations are making to erect a furnace; in
Fountain, in addition to her other minerals, salt water, of the
strongest kind, has been obtained, and in Parke, coal "equal to
the best bituminous coal of Pittsburgh, or, indeed, of any portion
of the United States," to use the language of Mr. Owen, has
been taken from, the coal banks on Sugar creek. Add to all these
the fact, that the Wabash & Erie canal passes through the midst
of them, and what stronger assurances of permanent, substantial,
and rapidly increasing wealth could be asked for by any people?
22 The correspondence between Tipton and Governor Wallace is
printed in the Senate Journal, 1838-39, pp. 716 ff. This together with other
correspondence regarding the removal of the Potawatomi appears in
Volume 3 of the Jo/in Tipton Papers. See also the Trail of Death. Letters
of Benjamin Marie Petit, by Irving McKee and "Journal of an Emi-
grating Party of Pottawattamie Indians," 1838, in Indiana Magazine of
History, 21 (1925) :316-36. Pepper's letters to Wallace, dated August 26
and October 2, 1838, are printed above. Thirty of the Indians died dur-
ing the journey.
182 Wallace Papers
The report of Mr. Owen will, of course, be presented to you,
from which you will learn many additional, interesting, and im-
portant details. You will be convinced, I think, of the propriety
of continuing the office, in justice to other parts of the state where
strong indications of mineral deposites are likewise discoverable.
The interest of the state, certainly, requires that these should be
fully ascertained — a thing, by the way, not to be accomplished in
one, two, or three years.23
The cause of education, I am happy to state, is prospering. A
new and imposing character has been given to the state institution
at Bloomington. It has put on the habiliaments and assumed the
dignity of a university. Its splendid endowments, its able and
devoted professors, its healthful location — all claim for it even
though in infancy a distinguished place among the great literary
lights of the nation. This generation may indeed be proud of it,
but above all, they should be proud of the glorious destiny that
awaits it ; that of becoming the intellectual nursing mother of
the future sons of Indiana. Auxiliary to the university are the
numerous institutions reared and sustained by private munificence
in various parts of the state. The Wabash college and the Asbury
university in the west; South Hanover college, the Franklin insti-
tute, and the Dublin academy in the south, centre, and east, while
the county seminaries, in many instances, are acquiring great
respectability, and are taking the stand they were designed to
occupy in the system marked out by the constitution. True, some
of the institutions above named, have been assailed, recently, by
severe calamities;24 but then the spirit of their friends has not
23 During his first year as state geologist, Owen endeavored to make
a survey of the entire state, while during his second year he made
a more detailed examination of geological formations and mineral re-
sources. Both of his reports were printed. A bill was introduced in the
House to extend the survey three years longer; this was amended in the
Senate to read one year, and passed in that form. The Governor, how-
ever, delayed the appointment until June of 1839 and by that time Owen
had become interested in a Federal appointment to explore the mineral
lands of the United States. See David Dale Ovcen. Pioneer Geologist of
the Middle West, by Walter B. Hendrickson (Indiana Historical Collec-
tions, Vol. 27, Indianapolis, 1943), 26-40.
24 Buildings at Hanover College had been damaged by a tornado and
those at Wabash College had been destroyed by fire. A joint resolution
Wallace: Message, December 4, 1838 183
been crushed; they are rebuilding and repairing their losses with
renewed and successful energy. Nor can I omit observing, and,
at the same time lending my feeble commendation, to the course
pursued and the ardor displayed by the school teachers of the
county of Wayne. It would rejoice me much to see their example
copied by those of a similar calling throughout the state. Their
conventions are got up in the right way — breathe the right spirit,
and show that they themselves entertain a just and becoming sense
of the dignity and importance of their profession.25
My attention has been directed to the very interesting subject
of the education of the deaf and blind, by a communication from
a Mr. James Hodge, the secretary for the institution of deaf
mutes, and one of the trustees of the institution for the blind,
established at Columbus in the state of Ohio. In order that the
whole subject may be as fully submitted as possible, I lay the
communication itself before you. From this document, it appears
that there are now in that school of deaf mutes, a number of
was passed authorizing the commissioners of the Sinking Fund to lend up
to $8,000 to the latter school for a term not exceeding five years. Laws of
Indiana, 1838-39 (local), p. 344.
25 A call had been issued through the local paper for the Wayne
County teachers to meet at Richmond on April 7, 1838. Bad weather
that day prevented many from attending, so those present adjourned
to meet again at Centerville on May 19. At that time the Eastern
Indiana Teachers Association was organized for the purpose of inter-
changing ideas on the best methods to promote the advancement of learn-
ing and to encourage teachers to continue in their profession. Samuel K.
Hoshour, head of the Centerville Academy, was elected president. The
association met again in September and December. At the latter meeting,
Hoshour was appointed a delegate to the educational convention that
was to meet in Indianapolis in January, 1839. Richmond Palladium,
April 14, May 26, November 3, 1838.
When the convention of the Friends of Education convened on January
2, Governor Wallace was chosen to preside over its deliberations; E. O.
Hovey and James M. Ray were chosen as secretaries. Hoshour was asked
to speak the first evening. The convention adopted a constitution, drafted
a memorial to the legislature upon the subject of appointing a superin-
tendent of common schools, and appointed a committee on school books.
The Governor was apparently impressed with Hoshour and what he
was doing at his school, for the following year he sent two of his sons,
William and Lew, to the Centerville Academy. Indianapolis Indiana
Journal, January 5, 12, 1839; Lciv Wallace. An Autobiography (2 vols.
New York, 1906), 1:55-56.
184 Wallace Papers
pupils from Indiana, and that application had been made for the
admission of several more, who, on account of their extreme indi-
gence and inability to pay the necessary expenses, could not be
received. But supposing — as I hope he well ma)' — that Indiana
will not consent to be behind any of her sister states, either in
offices of benevolence or deeds of humanity, this, gentlemen, sug-
gests the propriety of her doing for her indigent deaf and blind,
what Ohio has done and is now doing for hers — appropriate some-
thing for the public purse to enlighten and educate them ; a nobler,
a purer, a brighter act of genuine benevolence cannot be made to
grace your statute book. Permit me also to lay before you, a
letter upon the same subject, from Mr. Samuel Reese, a very
respectable and intelligent citizen of our own state, and to
earnestly recommend the suggestions contained in it to your serious
consideration.26
On the subject of the manner in which the state prison has
been conducted the past year, I acknowledge that it is not in my
power to make you any satisfactory communication. The act of
26 The House committee on education, William T. Noel, chairman, to
whom this portion of the message was referred, reported a bill on
January 30, 1839, proposing to use one fourth of the interest derived
from the surplus revenue which was going to the support of common
schools for an institution for the education of the deaf and dumb. No
action was taken on the bill. Another was introduced and passed requir-
ing county assessors to report the number of deaf mutes in their respec-
tive counties. The county clerks were then to certify the number to
the State Auditor. The committee estimated the number of deaf mutes
in the state as between three and five hundred. The result of the count
by the assessors has not been found, but the Federal census of 1840 listed
the number of deaf mutes in Indiana as 297; 112 of these were under
fourteen years of age. House Journal, 1838-39, pp. 443, 527, 571; Laws
of Indiana, 1838-39 (general), pp. 58-59; Documentary Journal, 1838-39,
No. 39. Mr. Reese's letter has not been found.
In the fall of 1839 an announcement appeared in the Bloomington
paper of the opening of a deaf and dumb school in that town. It was to
be conducted by John Hartford, formerly of the Hartford (Conn.) Deaf
and Dumb Asylum. One of the sponsors was Jane Orchard, mother of a
deaf mute. Bloomington Post, October 25, 1839. It is not known how long
it continued in operation, but when provision was made in the middle
forties for the establishment of a state school for the deaf and dumb,
Monroe County citizens petitioned that it be located in that county.
Senate Journal, 1845-46, pp. 227-36. The legislators believed that it
should be located in Indianapolis and it was so enacted.
Wallace: Message, December 4, 1838 185
last winter suspended the authority of the governor to appoint a
visitor as heretofore, and consequently placed beyond his control
the means of either acquiring or commanding the necessary infor-
mation or intelligence concerning it. The commissioner who
superintends the erection of the new addition to the prison is
made the visitor by the 24th section of this act, and while it care-
fully clothes him with all the power requisite to enable him to
conduct his examinations it as carefully provides that whatever
knowledge he may acquire shall be locked up in his own bosom.
He is required to report nothing.27
1 feel that I should neglect a very important duty were I to
omit bringing to your notice the wretched condition to which our
military organization has been reduced under the present system.
If some efficient measures be not speedily taken, the time is not
very remote when we shall not have a solitary vestige of an or-
ganized militia left within the limits of the state. The constitu-
tion of the United States has made it the duty of congress to pro-
vide a uniform system of organization for the militia of the
several states, and although its importance is universally felt, and
various attempts have been made by the national legislature to
27 See the act for the regulation of the State Prison in Revised Laivs
of Indiana, 1837-38, pp. 572-76. The Governor's power to appoint a
visitor was suspended for one year, from February, 1838, to February,
1839. This apparently was done in the interest of economy. The act
appointed Samuel Peck, of Washington County, commissioner, to contract
with some competent person for the extension and improvement of the
prison. Extensions, 210 feet long, were to be added on the north and
east sides of the prison building to provide more workshops and cells.
It was probably an oversight that Peck was not required to make a
report.
The superintendents of the prison, Hensley and Patterson, made a
report which is printed as No. 26 in Documentary Journal, 1838-39. They
gave the names of the 79 convicts with statistics regarding them, and
suggested that the legislature allow each prisoner one pound of tobacco
per month. They expected the extension to the prison to be finished ac-
cording to contract.
The House committee on the affairs of the prison were requested to
inquire into and report whether corporal punishment by whipping was
practiced by the superintendents. They found that such punishment did
constitute a part of the internal government of the prison, that it was
often resorted to, but for what cause and to what extent, they did not
know. House Journal, 1838-39, p. 346.
186 Wallace Papers
accomplish something upon this subject, it remains yet almost as
the constitution found it, a matter entirely of state concern. After
so great a lapse of time it has become a matter of necessity
to await no longer the tardy legislation of congress, and it is now,
unquestionably, the imperative duty of the state, to adopt some
system which will give organization and strength to her military
establishment. So dissatisfied are the people, with the present
imperfect arrangement, that in some regiments, I am informed,
there have been no musters during the present year, and that
others have become almost destitute of officers, in consequence
of the indisposition of competent individuals to accept commis-
sions under the existing law. A well regulated militia force must
ever be, so long as our republican institutions continue, the great
arm of our defense; without organization, it must ever be an
armed mob, and must necessarily, fail to command respect, or
to answer the great objects which it was designed to accomplish.
Liable to none of the objections which have usually and justly
been opposed to the existence of standing armies, it appears to me
a branch of our domestic institutions of the greatest importance
and one deserving the immediate and serious attention of the
legislature.28 Whilst upon this subject, I would remark, that no
28 Although no legislation was enacted at this session regarding the
militia, both the House and Senate took note of its deplorable condition.
In the House, the committee on military affairs wanted to repeal the
law which permitted men liable for militia duty to gain exemption by
paying a dollar each year into the county treasury; also, they favored
dividing the men according to age bracket and requiring those from
eighteen to thirty-five to form the active militia and perform the re-
quired musters and exercises; the older men, between the ages of thirty-
five and forty-five, would form the sedentary militia and not be required
to perform duty except in case of war. The committee also favored the
organization and incorporation of volunteer companies to stimulate the
spirit of military pride. A bill was reported which incorporated these
recommendations; it passed the House but the Senate apparently took
no action on it. House Journal, 1838-39, pp. 427-28, 473; Senate Journal,
1838-39, p. 604.
In the Senate it was resolved that the committee on military affairs
be instructed to inquire into the propriety of so changing the militia law
as to require only one hundred men in each county to perform militia
duty, and that under such regulation, each man should have pay for his
services, and should be armed and uniformed at the expense of the
Wallace: Message, December 4, 1838 187
appropriation was made at the last session to pay the salaries of
the adjutant and quarter master generals, and I respectfully re-
quest you to make provisions for the same, as without it, it will
not be in the power of the executive to fill these important offices,
with the expectation of having their duties strictly and faithfully
performed.29
My duty, also requires me to inform you, that our public rec-
ords are in a situation entirely unsafe, and where they are exposed
to total destruction by fire. They are, at present, deposited in the
house erected for the use of the governor, which is not fire-proof,
surrounded by various offices under the same roof, whose occu-
pants, be they ever so careful, may not always succeed in securing
the safety of the building. In case of accident, the state would
sustain a loss, which the misfortunes of other states, and the con-
flagration of some of the public depositories of the United States,
admonish us cannot be repaired by any subsequent attention or
expenditure. Our duty, therefore seems to require, that we should
place these important papers at once beyond the reach of accident,
by erecting fire-proof depositories for them. And I would accord-
ingly recommend an appropriation for that purpose.30
state. Apparently no further action was taken. Senate Journal, 1838-39,
p. 325.
At the following session a bill containing the above recommendation
of the House committee was reintroduced and passed. Latvs of Indiana,
1839-40 (general), pp. 22-25.
29 No special appropriation was made for these officials, but among
the estimated expenditures for 1839 was $150 for the adjutant and quar-
termaster general. Report of committee of ways and means, in House
Journal, 1838-39, p. 375.
30 The Senate committee to which this part of the message was
referred asked to be discharged without making any recommendation.
The State Auditor, in a letter to the Senate, said the Governor's Mansion
on the Circle was used for various state offices, and in this way saved
the state $1,000 a year in rent. He felt the building was worth repairing
and requested authority to make the necessary repairs. Senate Journal,
1838-39, pp. 588, 647-48. Provision was made for the repair of the roof.
Laws of Indiana, 1838-39 (local), p. 306.
Since the building was considered unfit for use as a residence for
the Governor, he was allowed $500 annually for house rent. Ibid., 5.
During his years as lieutenant governor, Wallace had lived at the
Mansion House hotel during the time he was in Indianapolis; upon be-
coming governor he and his family first occupied a house near the
188 Wallace Papers
I take pleasure in announcing to the Legislature, that Col. A. C.
Pepper, the Indian agent, has succeeded in effecting a treaty with
the Miami Indians, by which a considerable and the most desir-
able portion of their reserve has been ceded to the United States.
The extinction of the Indian title in our state is exceedingly desir-
able, and our prosperity, in some measure, intimately connected
with it. The Miami nation have, heretofore, been the occupants
of a very interesting portion of our state, from which settlement
and civilization have been excluded, whilst its immediate vicinity
has progressed with almost unexampled rapidity in improvement
and population. It is, therefore, earnestly to be desired, that the
terms of the treaty may be such as to justify its being ratified by
the proper authorities of the general government.31
I lay before you, for your reflection, agreeably to their request,
resolutions of the legislatures of Maine, Vermont, Connecticut,
Ohio, Kentucky, Georgia and Alabama, on a variety of interest-
ing subjects, deemed by them to have an important bearing upon
the general welfare of the Union.32
corner of Washington and Missouri streets, then moved into Dr. John
H. Sanders' house at the northwest corner of Illinois and Market streets
after it was purchased by the state for the residence of the governors
in March, 1839. This had been Mrs. Wallace's home before her mar-
riage, and was considered to be the finest residence in the city. Dunn,
Greater Indianapolis, 1 :109. The purchase price for the house and three
lots was $9,000. Marion County Deed Records, Vol. K, p. Ill, in Re-
corder's Office. It was to be paid for out of moneys received from the
sale of lots in the capital. Laivs of Indiana, 1838-39 (general), pp. 66-67.
31 By the terms of the treaty concluded on November 6, the Miami
ceded to the United States four of their reservations (the 6-mile reserve
on the Wabash; the 10-mile reserve opposite the mouth of Aboite Creek;
the reserve on Flat Rock; and Seek's reserve on Eel River) and the
northern part of the Great Miami Reserve, comprising in all some
200,000 acres. No definite time was set for the removal of the Indians,
but the government agreed to provide land for them west of the Mis-
sissippi whenever they were "disposed to emigrate." The treaty was
proclaimed in effect, February 8, 1839. Charles J. Kappler (ed.), Indian
Affairs. Laws and Treaties (2 vols. Washington, D. C, 1904), 2:520;
letter of A. C. Pepper, in Vincennes Western Sun & General Advertiser,
December 1, 1838.
32 The Maine resolutions concerned the Northeast boundary between
the United States and Canada. Fearing that British usurpations and
encroachments in that area indicated a spirit of hostility, and believing
Wallace: Message, December 4, 1838 189
Since the adjournment of the legislature I received from his
excellency the governor of Michigan, a communication enclosing
certain resolutions of the legislature of his state, on the subject
of the improvement of the navigation of the St. Joseph river. A
portion of this river traverses the territory of Indiana — runs
through the fine counties of Elkhart and St. Joseph, and termi-
nates, as its rises, in Michigan. The object of Michigan, there-
fore, appears to be two-fold ; either to prevail upon Indiana to
improve that part of the river within her own jurisdiction, or to
yield to her the privilege of doing it herself, at her own expense,
and for her own benefit. In my reply to the governor's communi-
cation, I did not flatter him with the hope, that Indiana would
feel herself able, at this time, to incur the expense that must
necessarily attend such an undertaking; but I did say — and hope
that the sentiment may meet with your cordial approbation —
that Indiana would, at least, cast no impediments in the way of
Michigan's accomplishing so desirable an object on her own respon-
sibility. Less than this we ought not to do, but much more if we
that vigilance, resolution, firmness, and unity should be displayed by the
United States in the matter, the legislature of Maine passed resolutions
on March 25, 1837, calling on the President of the United States to have
the boundary explored and surveyed. Public Acts of the State of Maine,
1837, pp. 184-85. For Indiana's reaction to the dispute, see below, 349n.
The Ohio resolution referred to here was one of protest against the
annexation of Texas. Acts of Ohio, 1837-38 (local), p. 407.
The Kentucky resolutions concerned aid given slaves who escaped
into the states north of the Ohio River, and caused considerable debate,
especially in the House of Representatives. A joint resolution on the
matter finally passed the Indiana Assembly (by a vote of 87 to one in
the House and 40 to one in the Senate) which declared that any inter-
ference by other states in the domestic institutions of slave-holding states
was contrary to the compact by which those states entered the Union
and is "highly reprehensible, unpatriotic, and injurious to the stability
of the Union." Those who argued against the measure did so largely on
the ground that an expression of this kind was uncalled for and un-
necessary. Laws of Indiana, 1838-39 (local), p. 353; House Journal,
1838-39, pp. 142, 177-78, 463; Senate Journal, 1838-39, p. 330; Indi-
anapolis Indiana Journal, January 5 and February 2, 1839. Upon re-
ceiving the Indiana resolution, the Kentucky General Assembly passed
another resolution commending Indiana's stand and the promptitude with
which she acted. Acts of the Commonwealth of Kentucky, 1836-37, pp.
353-54; 1838-39, pp. 390-91.
190 II (dlac e Papers
could. The wealth, the energy, and the enterprize, which so
distinctly mark the means, character, and conduct of our fellow-
citizens of northern Indiana, richly merit the fostering and pro-
tecting care of the state. The manufacture of the first bar iron
from our native ore has been achieved by them ; the novel spec-
tacle of Indiana glass will come next; in short, Mishawaka, South
Bend, and their vicinity, bid fair to become ere long the Pitts-
burgh of Indiana. Whatever, therefore, would tend to furnish to
these people any additional facilities calculated to advance their
agricultural, commercial, or manufacturing interests, should be
seized on with avidity, and industriously promoted. That the
improvement of the navigation of the St. Joseph's river would
have that tendency, I am confident. The papers and documents
bearing upon this subject will be laid before you, if called for.33
By the 9th article of the constitution of the state, it is expressly
made the duty of the general assembly "to pass such laws, from
time to time, as shall be calculated to encourage intellectual,
scientifical, and agricultural improvements, by allowing rewards
and immunities for the promotion and improvement of arts,
science, commerce, manufactures, and natural history ; and to
countenance and encourage the principles of humanity, industry,
and morality." I am induced to cite you to this article, and to this
particular feature of it, from the happy results which have crowned
legislative enactments in favor of similar objects in other states.
Maine, Massachusetts, Vermont, Connecticut, New Jersey, and
Pennsylvania, have led the way nobly in such matters; they have
fairly tested the power and efficacy of legislative encouragements.
The bleak and sterile hills of New England may, indeed, be said
33 The documents are not printed in the legislative journals. A select
committee was appointed from each house to consider the Michigan reso-
lution regarding the improvement of the St. Joseph River. Their report
pointed out the importance of the stream for transportation purposes
and the desirability of improving the navigation, but stated that it would
be impossible for Indiana to give any aid at the present time. It was
recommended that the Governor continue his correspondence with the
Governor of Michigan and determine in what manner and upon what
conditions and restrictions the State of Michigan would prosecute and
complete the improvement at her own expense. House Journal, 1838-39,
p. 366; Senate Journal, 1838-39, pp. 373, 448-49.
Wallace: Message, December 4, 1838 191
to have felt their refreshing influences. The sons of the Pilgrims
dependant as they had been for years, on the supply of foreigners,
for a great portion of the very bread they consume, could no
longer brook such dependence, and in the true spirit of their
sires, boldly essayed to remedy it. Maine and Massachusetts spoke
through their respective legislatures, and offered a liberal premium
to encourage their husbandmen to the culture of wheat. The
effect more than exceeded expectation; it was truly magical.
Millions of bushels were called into existence by it, and the people
of these states are now doing what they seldom, or never did
before, are producing a sufficiency of this article to supply their
own wants. With such lights, therefore, before us; with such
brilliant results to dispel all doubt and hesitancy, why should
Indiana remain mute? Is there less potency in her voice, think
you, than Maine and Massachusetts have proved to be in theirs?
If the arm of industry, nerved and stimulated to additional energy
by the cheering hope of honorable reward, could command, from
so uncongenial a soil as that of New England, such an astonish-
ing increase, what might not the same arm, nerved and stimulated
in the same way, produce from the rich, fertile, and exhaustless
plains of Indiana? It is not I assure you in the power of imagina-
tion to conceive or calculate the consequences of such an effort.
But the question with us, I esteem it, is not one of mere emula-
tion, it reaches higher, and is resolved by the constitution into
one of duty — stern imperative duty — you shall do it. Besides
which, we have embarked in a splendid system of internal im-
provement ; we are checkering the state all over with roads and
canals; we are expending millions of money; and for what? To
look at, to boast of, and nothing more? I hope not. Such, at
least, is not our language to the tax payer; to him who shoulders
the burthen. We construct this road, we open this canal, that
your industry may be stimulated, that your farms may be made
profitable, that you may have a market for your surplus, and on
the strength of it he contributes generously and uncomplainingly.
But shall we stop here? Stop short of the performance of our
whole duty? If it is right to encourage the agriculturist by con-
structing roads and canals, and expending millions upon them, why
192 Wallace Papers
not go the whole length, and say to him, increase your capital, put
forth all your energies; there is the sugar beet, cultivate it, and
like Michigan, Indiana, will reward you; there is the article of
silk, cultivate it, and like Maine and Massachusetts, Vermont
and Connecticut, New Jersey and Pennsylvania, Indiana will
reward you. Say to the farmer, that for every short horned
Durham, and for every twenty of the best breed of hogs he shall
raise, he shall be entitled to a liberal premium. If nothing else,
provide for an agricultural survey of the state. Nay, we have, as
it is well known, our salt wells, we have our inexhaustable mines
of iron ore, but unfortunately, we have not the capital necessary
to work them; bring this capital from abroad then by offering
a premium — a generous premium — for every bushel of salt, and
for every hundred pounds of iron manufactured within the State.
By taking such steps, by acting on such enlarged and liberal
principles, you will do wonders in the way of creating wealth ;
you will completely obey too, the injunction of the constitution ;
you will then emphatically encourage and promote agriculture,
commerce and manufactures; you will in the fullest sense of the
term, "countenance the principles of humanity, industry, and
morality."34
34 The Senate committee to whom this portion of the message was
referred, reported that they considered it inexpedient to legislate on the
subject at this time. Senate Journal, 1838-39, p. 588. The House com-
mittee on agriculture was favorable toward the Governor's suggestions
and made a lengthy report containing the following recommendations
among others: the promotion of silk culture, raising of beets for sugar,
and the growing of wheat by payment of bounties by local agricultural
societies, the money to come from the State Treasury; the promotion of
iron manufactories; use of saline fund to import Durham cattle; the ap-
pointment of a secretary to the state board of agriculture, the former sec-
retary having left the state. The committee followed their report with the
introduction of two bills: one to amend the act incorporating agricultural
societies, the other to promote the culture of silk and the manufacture
of salt, iron, and sugar. Both bills passed the House on February 15
but reached the Senate too late in the session to receive attention. House
Journal, 1838-39, pp. 228-35, 601-2, 622.
Another bill introduced later in the session would have authorized a
loan to agricultural societies for the purpose of procuring from England
an improved breed of stock. It passed the House on February 12, but
was lost on second reading in the Senate. Ibid., 1838-39, pp. 469, 550-
Report on Three Per Cent Fund, December 6, 1838 193
Gentlemen of the Senate and of the House of Representatives,
permit me in conclusion, to congratulate you upon the general
prosperity of the state. We are indeed, deeply indebted to Divine
Providence for the enjoyment of so many blessings; let us there-
fore endeavor so to shape our course, and our conduct as to merit
a continuance of them hereafter.
David Wallace
December 4, 1838.
Treasurer of State: Report on Three Per Cent Fund1
Treasurer's Office,
Indianapolis, December 6th, 1838.
Hon David Hillis, President of the Senate:
I herewith transmit to be laid before the Senate, a statement of
the operations and condition of the 3 per cent. fund.
Very respectfully your obedient servant,
N. B. Palmer,
Agent three per cent, fund
The total amount of the 3 per cent, fund received from! the
United States prior to the 1st December, 1837, including also
$2,550 received from the State Treasury
is $438,100 61
There has been received from the
United States the present year 16,000 00 $454,100 61
51; Senate Journal, 1838-39, pp. 698-99; Indianapolis Indiana Journal,
February 15, 1839.
A memorial praying a loan to aid J. W. Osborn and Jacob S. Wil-
lets, publishers of the Indiana Farmer, in establishing at Indianapolis an
experimental field and an agricultural and horticultural warehouse and
seed store was reported on favorably by the agricultural committee of
the House, but the bill they introduced was tabled. House Journal, 1838-
39, pp. 599-601.
i Senate Journal, 1838-39, pp. 38-41.
194 Wallace Papers
The payments from this fund on the
various appropriations to roads,
rivers, and counties, prior to the 1st
December, 1837, amount to $396,620 26
There has been paid on same account,
the present year 36,602 56
The total amount of incidental ex-
penses up to the 1st December,
1838, is $ 4,833 94 $438,056 76
$ 16,043 85
Leaving on the 1st of December inst., on hand, subject to the
order of the proper commissioners, the sum of $16,043 85.
The following table will show the amount appropriated to each
of the several objects, to which this fund has been directed; also
the amount paid to, and the balance due to each.2
By the foregoing it will be perceived, that there has been
specially appropriated to roads, rivers, and counties, the sum of
$574,148 58.
The total amount received by the
Agent, from the United States, and
the State Treasury is $454,100 61
From which deduct total amount of
incidental expenses 4,833 94 449,266 67
$124,881 91
Exhibiting a balance of appropriations over the amount received
from the United States of $124,881 91.
All of which is respectfully submitted.
N. B. Palmer, Agt. 3 per ct. fund
- The table lists the counties, with the amount appropriated to each
from the Three Per Cent Fund, the amount paid, and balance due. In
addition it gives the amount appropriated and paid for 53 roads as
$111,740 05, and the amount appropriated and paid for improving navi-
gation on ten rivers as $2,050.00. Senate Journal, 1338-39, pp. 39-40.
Report on State Bank, December 7, 1838 195
President of State Bank: Annual Report1
[December 7, 1838]
To the Senate —
The twelfth branch of the State Bank was located at South
Bend, by the Directors, at their session, held in February last.
Books for subscription of stock were opened there in June, the
amount required by the charter was subscribed, the first instal-
ment was paid in specie by the individual stockholders and the
state, and by proclamation of the Governor, that branch was
authorized to commence banking operations on the 14th
November.
The amendments proposed to the Charter, by the Legislature
of 1836, having been agreed to, by all the branches, the Directors
of the State Bank in conformity thereto, located the 13th branch
at Michigan City, the 14th at Logansport and the 15th at Rush-
ville. But one of the branches, not having signified its assent to
the location of the 16th branch, until the November session, no
further action has yet been had in relation to it. It is understood,
however, that it will be placed in a district to be formed out of
the Terre Haute and Lafayette branch districts, at such point, as
shall on examination, appear best adapted to promote the interests
of the State and the institution.
Books of subscription for the 13th branch were opened in
October, the stock has been subscribed and notice given for the
payment of the first instalment on the first of February next;
soon after which, it is expected, that branch will commence
operations.
Two other branches will be organized the ensuing year, as
soon as the funds at the command of the State Board will admit,
and if the collections from the sinking fund and surplus revenue
loans should be larger than usual, the 16th branch may also be
organized.
No loan having been made by the state to pay the first instal-
ment of its stock in the 12th branch, $50,000 was advanced by
i Senate Journal, 1838-39, pp. 103-8.
196 Wallace Papers
the Bank for that purpose, in anticipation of the 4th instalment
of the Surplus Revenue.
Additional state stock has been subscribed as follows, viz :
$20,000 each in the Richmond, Evansville and Terre Haute
branches, and $32,000 each, in the Lawrenceburgh, Indianapolis
and New Albany branches, with the premium equivalent to the
profits on hand. Similar subscriptions will be made in the Madi-
son and Lafayette branches, when the surplus fund in the former
shall be reduced, and the state of the suspended debt in the latter
be more fully ascertained.
For the advance of capital made for the state, the Bank will
be reimbursed from the 4th instalment of the surplus revenue, or
if that be withheld, the bonds of the state will be substituted.
These advances draw interest under the law of last session, at
the rate of six per cent, until repaid, and the stock is entitled to
the same dividend as other stock, for the benefit of the state.
As the surplus fund had become so large in some of the branches
as to prevent the subscription of new stock, on account of the
high premium necessarily demanded, the branches at New Albany,
Indianapolis and Lawrenceburgh, were authorized in May last
to divide their surplus down to one-eighth their capital, on con-
dition that the stockholders would immediately subscribe new
stock equal to the amount of their dividends. The privilege was
accepted, and by this division $29,375 Avas set apart to the state,
the same amount to the stockholders, and new stock has been
taken by them and others to the amount of $71,350. A similar
privilege was granted, in November, to the Richmond, Madison
and Terre Haute branches, by which they will be able to enlarge
their capital considerably.
It is an object of much solicitude to all, who are interested in
the Bank, that its stock should be increased as the business of the
state requires, and though there is no great demand for the stock
in any of the branches at such a premium, as the profits on hand
would divide, and in most of them it is frequently sold at much
lower rates, yet the increase of private stock will be constant until
it reaches the limits fixed by the charter. Should no further pro-
vision for state stock be made, the capital of the Bank may thus
Report on State Bank, December 7, 1838 197
be increased to more than twice its present amount. Good policy
however requires, that some of the branches should enlarge their
capital much faster than others.
Whether the state stock should be increased under power
reserved in the Charter, and if so, to what extent, are questions,
which the wisdom of the Legislature must decide. The banking
capital of the state is admitted to be small in proportion to its
business; individual enterprise in the management of the institu-
tion holds out the hope of good dividends and the personal re-
sponsibility of directors and stockholders, who must loose their
stock entirely in a branch before the state stock can be affected, is
a strong guarantee for the state interests. If the addition be made,
they incur the principal hazard and can derive no advantage
except as citizens of the state having an interest with others in
the general welfare. From present appearances, it is believed
that the state stock might be considerably increased with safety
to the bank and profit to the state. As the demand for individual
stock is now much less than it probably will be hereafter, may not
the state, if funds can be had on moderate terms, borrow for
bank stock more than in[di]viduals will probably subscribe at
this time and hereafter the private stock may be increased in pro-
portion when it shall be more in demand? While the contracts
of the state shall be maintained inviolate and the bank interests
of its citizens shall be protected as other property with the increas-
ing wealth of the state, [what] will be the demand for stocks, as
a source of secure income for the aged, the young, and the help-
less, for whose use they are peculiarly adapted.
In reviewing the course of the Bank in suspending and re-
suming specie payments, there appears to be nothing in the whole,
against which any charge even of error or imprudence can be
made. — There has never been but one opinion amongst those
whose judgments deserve consideration, as to the propriety of the
suspension by this bank, and nothing was omitted that could be
fairly done to bring about an early resumption. By its corre-
spondence with other banks, by the action of its delegates in the
April Bank Convention and by the prudent management of the
branches, a general resumption was urged and finally effected by
198 Wallace Papers
the banks in the Eastern, Western, and Middle states on the 13th
August last with but little inconvenience to our citizens or to the
bank. The reduction of its circulation and discounts, at the season
of the year when both are usually at their lowest stage, has
enabled it, since that time, to increase its business and augment
its issues largely. The stimulus thus given to enterprize showed
beyond all question, the correctness of the policy by which the
bank always retaining and exercising its powers of being useful,
is thereby in a situation to give liberal aid, at periods most impor-
tant for the interests of the country.
The loans made to pay debts seldom extend any beneficial influ-
ence beyond the first operation and not unfrequently they only
serve to increase the load on the debtor, by accumulating interest.
They have therefore been uniformly discouraged.2 But loans
made to the exporter are felt at once by the farmer; what the
manufacturer, builder, or employer borrows, will benefit the
laborer and consumer, and none can fail to perceive the substantial
advantages, that are realized by the extension of the business of
- Calvin Fletcher, one of the directors of the State Bank, made this
comment on the credit system in his Diary on August 22, 1838: "I was
called on to contemplate the following evils peculiar to this part of
Indiana at this time viz the extravegant price of agricultural products &
mechanical labor as well as the scarcity of the former — Our merchants
for the last 10 years have been in the habit of selling goods to every
man who was supposed to hold real estate sufficient to give a fair assur-
ance of paying for the articles bo't The consequence has been & still
prevails that no man who cultivates the ground is under the necessity of
making an immediate application of his labor in order to clothe his
family or to purchase any deficiency in his food for his family because
the merchant regulates all the trade of the mechanic & farmer as well
as the professional man — Therefore no stimulation from the necessity
of applying the labor of the mechanic — or the immediate products of
the farmer they both put off the day of industry & expect that 1 year
will develop new resources by the extravegant sale of a town lot or a
horse or some other anticipated means never relied on by a community
where imprudent credits are not given — The consequence is that for
the last 4 years say 6 years there has scarcely been the extension of a
farm no new fields opened — & at the same time an enormous increase of
consumers. . . . Such has been the fatal consequences of this credit policy
that all industry has been paralized all enterprise stoppd & a young
man who can get credit for a new coat a year will pay 50 cts for a
water mellon which wd sell in a country where people labor for 6 cents."
Calvin Fletcher Diary, in Indiana Historical Society Library.
Report on State Bank, December 7, 1838 199
the bank, in its effects on the markets for produce and the compe-
tition of our citizens with others.
The dividends of the bank were three per cent, the first year,
9 36-100 the second, 8 the third, and 9 63-100 the fourth, exclu-
sive of the amount divided in three branches to add to their stock.
The first year the dividend was insufficient by $10,000 to pay the
interest on the loan for the state stock, but the second year the
overplus of profit set apart to the state was $28,600, the third year
$29,250, and the fourth year $70,118. By computing the state's
interest in the remaining surplus fund on hand, after allowing for
bad debts, interest paid in advance and interest due the United
States, there is a further sum of at least $100,000 gained by the
operation, of the bank, making in all a clear profit to the state of
$217,368. The rate of profits on the capital invested varies but a
small fraction from 12 per cent, a year.
The profits of the Bank, for the first three years, depended
on many circumstances of a temporary character. An unequalled
circulation of the paper, maintained without an effort ; a large
amount of United States deposites; extensive disbursements of
eastern funds by public works, and the high premium these funds
soon afterwards commanded, gave great facilities for profitable
banking without any loss to our citizens. A change in all these
matters has taken place and the profits hereafter must be less,
yet the greater abundance of, and demand for, the produce of
the state and the increase of real business, on prompt loans, will
to some extent supply the deficiency.
The actual payments on notes and bills, taking all the branches
together, cannot fall much below one-fourth the discounts, every
three months, and the sums thus collected, if not reserved for the
exporting season are loaned again immediately. Here then are
between three and four millions of dollars in the course of a year,
issued by the Bank to constitute, in a great degree the circulating
medium of the state. No matter how much the capital be in-
creased, without punctual payments, new loans cannot be made,
and in a state where the balance of trade is against it, there must
be continual new discounts and issues of paper or there will be
such fluctuations in the amount of circulation, as to affect seriously
200 Wallace Papers
all the business of the country. Much of the merchandize and
other articles convenient and necessary for the citizens of the
state, have been, and will continue to be purchased at points to
which very little of our produce is sent. To make the purchases,
and to pay the debts contracted on these accounts, it is estimated
that at least $5,000,000 annually have been remitted through the
agency of the several branches. They might, indeed, have refused
collections and made no provision for remitting money, but in
that case all the specie in the state, and all that could be imported
would not stand the drain upon it for a single year. Debts must
be paid whether the Bank collects them or not, and funds must
be provided at points where they are wanted, or they will be with-
drawn in any manner the owner sees fit, no matter with how much
inconvenience to community. No uniformity of circulation or
regularity in business can be expected, if the Bank do not use its
means and its influence in conformity with the course of trade
and the wants of the public. In reference to these matters, it is
believed that much, if not all that was desirable, has been done.
By the avails of the state loans, by the bills of exchange bought
of the exporters, and by the disposition of such other eastern
funds as it could collect, the Bank has been able to meet all
demands from abroad and yet preserve its specie undiminished.
For the six months ending the first of November last, the bills of
exchange were only from a seventh to a tenth of the whole dis-
counts. They will exceed that proportion, for some months to
come, it is hoped considerably; for where a third of the discounts
are in bills, that will be promptly paid (and none other should be
purchased,) the amount of business done may be enlarged nearly
in that proportion. The exchange charged should be a fair allow-
ance according to the custom of banks, for the difference in the
value of money, and for keeping back their funds previously to
supply the greater demand in the exporting season.
As yet, it is believed, the Bank has sustained but few losses.
None of much consequence are known.
The branches have been regularly visited and examined as is
required by the charter.
No complaints have ever reached the State Board of any im-
proper conduct in a large majority of the branches. All alleged
Report on State Bank, December 7 , 1838
201
grievances have been carefully investigated, and such steps taken
in regard to them as the good of the public and the safety of the
other branches appeared to require. A body representing the state
and the interests of every branch has decided, with unanimity, on
almost all matters submitted for its action. The responsibility of
the individual stockholders; of the directors, in their private
capacity ; of the branches for each other ; and of a portion of
the officers to the legislature, throws around the institution all
the security which private interest and respect for public opinion
can create. Under such circumstances it can scarcely fail to
effect the objects for which it was instituted. It furnishes a cir-
culating medium in which full reliance is placed. It is em-
phatically a state institution, in which the punctual, the indus-
trious, and enterprizing of all parties obtain accommodations;
and its stock, though less profitable than money vested in most
other businesses, will yet be sought for on account of its regular
dividends.
The following statements, taken from the last semi-annual
examinations of the branches, present the condition and business
of the Bank in a light which must be gratifying to its friends and
the public generally.
Stock ownec
by persons
To others
who owe
To other
not
nothing or
Loans to
Stock-
Stock-
less than
Branches:
Directors:
holders:
holders :
their Stock
Indianapolis
$72,564
$ 65,874
$243,945
$44,100
Richmond
29,858
48,676
219,159
54,700
Lawrenceburgh
72,729
143,719
271,982
12,500
Madison
65,000
113,419
254,675
94,600
New Albany
30,676
66,161
213,193
56,150
Evansville
67,613
53,688
132,938
35,200
Vincennes
38,597
49,568
148,021
62,850
Terre-Haute
16,364
59,368
180,951
57,400
Bedford
37,424
65,582
137,987
40,100
Lafayette
18,000
171,168
175,469
45,150
Fort Wayne
44,724
77,307
178,041
36,600
202 Wallace Papers
In addition to the stock of the state in the institution, the owners
of about half the private stock borrow little or nothing. Such an
amount held merely for the dividends, is a further guarantee for
correct conduct.
The following abstract from the annexed tables shews the con-
dition of the Bank, Nov. 17, 1838.
RESOURCES :
Notes and bills discounted $3,679,200 79
Real estate, furniture, &c 144,386 01
Dues from branches 46,621 72
Bank balances 226,521 94
Advances to the State, Remittances, &c 265,287 58
Fund Commissioners 588,484 89
Branch Notes on hand 114,660 00
Other Bank Notes 155,813 00
Specie 1,345,832 08
$6,566,808 01
LIABILITIES :
Due to other Banks $ 269,905 30
Notes in circulation 2,951,795 00
Due the Treasury United States 206,534 10
Due to Branches , 53,560 33
Due Sinking Fund, &c 56,535 97
Dividends unpaid 88,448 31
School Fund 7,830 25
Pension Fund 795 10
Individual Deposites 393,548 79
$4,028,954 15
The balance will pay $2,216,700 the capital stock in the Bank
and leave $321,153 for losses, interest due the United States not
yet ascertained and to be divided hereafter.
Report on Sinking Fund, December 7 ' , 1838 203
Since the last annual Report the following items have in-
creased, to-wit :
Capital Stock $338,793 75
Notes in circulation 725,100 00
Specie 217,700 52
Discounts 328,227 50
By means of the new branches at the north, the increase of cap-
ital stock in several of the old branches and the enlarged opera-
tions for the winter's business, the most of these items will soon be
considerably increased.
Respectfully submitted,
S. Merrill, Prest.
3
Report of the Commissioners of the Sinking Fund1
Hon. David Hillis, President of the Senate:
Herewith is the Report of the Commissioners of the Sinking
Fund.
I am, &c,
S. Merrill
December 7, 1838.
The receipts by the Commissioners of the Sinking Fund, from
the organization of the Board up to Dec. 7, 1838, have been as
follows:2
State Bonds $1,390,000 00
Premium, Interest and Exchange on same 29,496 92
3 Tables showing the condition of the State Bank on November 17,
183S, and the resources and liabilities of each branch on that date,
appear here in the original report and are not reprinted.
i Senate Journal, 1838-39, pp. 137-39.
2 The law creating the State Bank provided for a Sinking Fund
into which should be placed all unapplied balances of loans procured on
the part of the state for its stock in the bank, or for the purpose of being
lent to stockholders to enable them to meet their stock installments in
the bank; the semiannual payments of interest on state loans to stock-
holders and sums received in payment of said loans ; the dividends paid
204 Wallace Papers
Dividends on Bank Stock 273,659 50
Interest received for stock loans 38,271 87
Interest received on Current loans 71,598 65
Received for blank Mortgages 114 08
Over payment by Fund Commissioners 28 92
Over drafts on Madison and Bedford branches 1,824 46
$1,804,994 40
The above have been appropriated as follows:
For bank stock $ 880,000 00
Loans to stockholders 254,120 70
Expenses of Fund Commissioners in making loans 4,790 13
Expenses of transporting specie 1,732 12
Interest on State bonds up to January 1, 1839 229,597 88
Premium, &c. to pay the same 5,116 49
Current Loans 401,741 02
Pay of commissioners' clerks, office expenses, &c,
from commencement (in addition to the appro-
priation from the surplus revenue) 4,524 81
Cash in Indianapolis branch 2,119 33
Cash in Lawrenceburgh branch 20 50
Cash in Terre-Haute branch 9,529 50
Cash in Lafayette branch 5,696 14
Cash in Fort Wayne branch 5,399 69
R. Morrison, $114 15; L. H. Scott, Vincennes
agency, $482 94 597 09
$1,804,994 40
by the bank on state stock, and dividends accruing on such portions of
the stock belonging to other stockholders as shall have been paid for
by loans from the state and which have not been repaid. The principal
and interest on the said fund was reserved for the purpose of liquidating
and paying off loans and the interest thereon negotiated on the part
of the state for payment of its stock in the bank and payment of second
and third installments of the shares of other stockholders. Laivs of
Indiana, 1833-34-, pp. 35-36; Messages and Papers of Noah Noble, 416n.
Report on Sinking Fund, December 7 , 1838 205
Condition of Sinking Fund on account of Surplus Revenue:
Receipts, 3d instalment of Surplus Revenue $286,751 48
Receipts, 4th instalment anticipated in part 196,301 03
Interest paid on loans 50,507 57
Dividends paid on bank stock 6,297 29
Over drafts on Bedford, Madison, and Lafayette
branches 3,702 87
$543,560 24
Appropriated as follows:
Loans on mortgages $257,153 26
Bank stock 206,000 00
Premium to make same equal to other stock 20,708 00
Payments of interest to Fund Commissioners 46,011 11
Expenses of Sinking Fund appropriated to Surplus
Rev 2,861 79
Cash on hand — Indianapolis branch 5,695 55
Lawrenceburgh branch 1,505 23
New Albany branch 1,288 83
Evansville branch 644 35
Terre-Haute branch 805 56
Richmond branch 805 56
Fort Wayne branch 81 00
$543,560 24
The loans are made on mortgages of real estate to double the
value in sums generally, from $200 to $500 each. The large
amount of cash to loan at particular times; the importance of
making it productive as soon as possible ; the want of applications
from many of the counties; the rush of borrowers from others;
and the necessity of discouraging applications from some parts of
the state, where land, soon after its entry, was valued at enormous
rates, have contributed to throw into a few counties too large a
proportion of the loans. It is believed, however, that the fund will
not be a loser by this mode of loaning. Titles indisputable and
206 Wallace Papers
easily ascertained have been secured, and the property mortgaged
is very rarely of a kind exposed to much fluctuation in value. No
property has yet been exposed to sale for the interest, nor are any
losses anticipated.
During the present year, in compliance with the directions of
the last legislature, the new loans have been made principally in
the counties which had previously received but a small portion —
and none would have been made elsewhere, but for engagements
outstanding, and where exchanges have been arranged by the bor-
rowers themselves, which would produce to the fund an increased
rate of interest.
Since the resumption of specie payments, the Sinking Fund
Commissioners have made few loans, deeming it better to reserve
their means to organize the new Branches. They are preparing
to pay the first instalment of state stock in February, for the
thirteenth Branch, and they expect to organize the others without
delay not absolutely unavoidable.
Rate of allowances for services
To Commissioners or others, acting as Agents, for loaning
(where the drafts are made through the office,) Y* per centum.
To do. do. for loaning and receiving and paying over annual
interest, (not through the office), one per cent, on the loan.
To Clerk, per annum $200
To Assistant Clerk, per annum 800
For Rent, per annum 50
Respectfully submitted,
S. Merrill, President
L. W. Scott,
R. Morrison,
^ .„ > Comrs.
C. .b LETCHER,
A. Worth,
Treasurer's Report, December 10, 1838 207
Treasurer of State: Annual Report1
Treasury Department,
Indianapolis, Dec. 10, 1838.
The Treasurer of State, in obedience to the directions of the
"Act concerning the Auditor of public accounts, and Treasurer
of State," submits the following Report of the Revenue and ex-
penditures of the State, and the operations of the Loan office, &c,
from the 1st of December, 1837, to the 30th of November, 1838,
both inclusive.
RECEIPTS during the fiscal year, from revenue
Receipts during the fiscal year of 1836 525 69
Receipts during the fiscal year of 1837 159,931 48
Receipts during the fiscal year of 1838 4,175 91
Lots &c. at Indianapolis 7,373 52
From sales of Michigan road lands 4,500 00
Estates without known heirs 71 00
Incidental payments 611 50
The receipts and credits in the college branch of the
loan office department have been :
Amount received from William Alex-
ander, commissioner of the reserve
township, in Monroe county 1,902 00
Received from James Smith, commission-
er of the reserve township, in Gibson
county 250 00
Loans refunded 5,547 00
Interest on loans 4,653 95 12,352 95
The amount paid into the treasury of
saline fund, appertaining to the loan
office, has been, from Andrew Wilson,
commissioner of the saline lands in
Orange county 2,385 30
Henry Young, commissioner of saline
lands in Washington county 618 97
1 Senate Journal, 1838-39, pp. 65-71.
208 Wallace Papers
Milton McPhetridge, com'r in Monroe
county 57 25
Loans refunded 1,300 00
Interest on loans 2,061 97 6,423 49
$195,965 54
THE EXPENDITURES and Liabilities of the Treasury
during the same period have been:
Over payments made by treasurer of
state during the financial year of
1837 $ 5,123 75
Pay and mileage of members of the leg-
islature, including clerks and door-
keepers 43,412 68
Printing and stationary 18,321 67
Specific appropriations 6,962 44
Contingent expenses 1,212 38
Premium on wolf scalps 443 50
Pay of Probate Judges 2,994 00
Pay of Executive officers 3,297 60
Pay of Judges of supreme and circuit
courts 16,720 28
Pay of Circuit prosecutors 1,480 08
Pay of Adjutant and Quarter-master
Generals 75 00
Payments on account of State house .... 300 00
Payments on account of State Library .. 591 45
Payments on account of State Prison .. 1,022 86
Payments on account of Presidential
election 10 00
Michigan road 4,500 00
School money refunded 1,884 80
Geological survey 1,000 00
Internal Improvements 40,000 00
Conscientious fine distributed 7 00
Seat of Government 1,557 66 150,917 15
Treasurer's Report, December 10, 1838 209
The disbursements on account of the
college branch of the loan office have
been:
Payments on account of Indiana Col-
lege, incidental expenses of Loan office 460 95
Loans of College fund 14,256 00 14,716 95
Payments and liabilities on account of
Saline Fund, subject to the Loan
office laws, are:
Loans of Saline fund 6,715 00
Saline fund expenses 144 91 6,859 91
Balance on hand, November 30, 1838 23,471 53
$195,965 54
Note — Warrant No. 3101, Probate $6 outstanding.
Condition of the Treasury for 1839:
The probable means of the Treasury for the year 1839, may be
estimated at $98,721 53, as follows, viz:
Balance in the treasury on the 30th November,
1838 $23,471 53
Revenue of 1838, from polls and taxable property, on
the supposition that only 5 cents on the $100 of the
value of taxable property be ultimately retained for
state purposes 75,000 00
From sales of Lots in Indianapolis 250 00
$98,721 53
The expenditures for the same period will be, as estimated below,
$97,731 38, viz:
Salaries of judges and prosecutors 14,000 00
Salaries of executive officers 3,200 00
Printing, stationary, binding and dis-
tributing laws 15,000 00
210 Wallace Papers
Legislature, including clerks and door-
keepers 40,000 00
Contingent and specific appropriations 6,500 00
Probate judges 3,200 00
Wolf scalps 300 00
State prison 1,100 00
State library 350 00
Adjutant and Quarter-master Generals 150 00
State House 1,500 00
Geological survey 1,700 00
Schools moneys refunded 500 00
Seat of government 1,760 00
Existing claims unaudited 6,000 00
To which may be added the following
liabilities of the treasury, viz :
Estates without heirs to be refunded .... 1,878 38
Conscientious fines to be distributed 543 00 97,731 38
Leaving an estimated balance in the Treasury on the 30th No-
vember, 1839, of $990 15.
From the foregoing exhibits of the receipts and disbursements
for the year 1838; and the estimates of the probable condition
of the treasury for 1839, it will be seen that the payments into
the treasury in the financial year just closed, exceed the expendi-
tures of that year by the sum of $23,471 53.
And that this balance, together with other estimated payments
into the treasury during the approaching year, 1839, will exceed
the estimated demands upon the treasury for the same period, by
the sum of $990 15.
Leaving a balance in the treasury on the 1st of December, 1839,
of $990 15.
It will be perceived that this estimate is made upon the sup-
position that the poll tax and only 5 cents on the $100 of valua-
tion of taxable property will be retained in the treasury to be
appropriated to the ordinary expenses of the government, and
that the remaining property tax will be directed to payment of
interest on state loans.
Treasurer's Report, December 10, 1838 211
The undersigned has been guided in this arrangement of the
estimates by the indications drawn from the partial action of
the last General Assembly, and in accordance with the recom-
mendation of the committee of ways and means in reference to
this matter, as well as from a conviction that the poll tax and 1/3
of the present property tax will produce an adequate amount to
meet the current expenses of the year, if no extraordinary appro-
priations shall be made, and rigid economy shall be observed.
But if in the progress of the session, the General Assembly
shall deem it necessary to make any considerable additional appro-
priations, or shall by their action authorize other expenditures than
is now provided by law, it will be indispensable, so to increase the
per cent, for state purposes as will correspond with such increased
demands on the treasury as may be authorized.
The promptitude and fidelity which has marked the collection
and payment into the treasury of our public revenue for a series
of years, forms a just subject of pride and commendation; but I
deem it proper to express my apprehension, that, owing to the
pecuniary pressure which has succeeded an unusually bouyant and
active state of prosperity, we have great reason to expect far
more tardy and incomplete collections of the public revenue than
has heretofore been made.
If this should occur on an adjustment of the revenue, and ex-
penses so nearly balanced, it would endanger embarrassment to
the treasury; but as the payments of the revenue upon which the
demands on the treasury for the current year, will be in progress
of payment during the session, the legislature will be better ad-
vised in reference to this contingency before it is probable that
legislative action will be had in reference to the public revenue.
The total amount of valuation of taxable property for 1838,
falls short by nearly two and a half millions of that of 1837, a
fact affording unerring evidence of pecuniary reaction, and of the
just ground for the apprehensions above suggested.
The amount of polls have increased from 1837 to 1838 nearly
6,000, which will increase the revenue from this branch, about in
the same proportion as that of the retrogade of the property tax,
leaving the gross amount of revenue nearly the same as that
of 1837.
212 Wallace Papers
The finances of our internal improvement department, do not
properly come within the scope of my official duties; but as a
portion of the funds for the payment of the interest on the im-
provement debt, is drawn from the public revenue, and through
this department, it will be proper to say, that exclusive of the
amount of revenue embraced in the foregoing estimates as neces-
sary for the ordinary expenses of the State, there will probably re-
main about $80,000.
Only one half of this amount however, will under existing
laws, be paid over to the fund commissioners for the purpose of
discharging interest on the public debt. The balance being
$40,000, will be in the treasury, subject to such direction as the
General Assembly may provide.
To provide the means for the payment of the interest on the
public debt already contracted, and the annually increasing
amounts which must accrue from the augmentation of the public
debt, resulting from the further prosecution of the public works
in which the state is engaged, is a subject of paramount interest.
The deep concern which attaches to this subject, in view of the
importance of preserving unimpaired the high credit of the state,
and the difficulties attendant on raising the means necessary for
this object, seem to me as presenting a question to which all
others connected with the finances of the state, are likely in a
great measure, to become subordinate, in regard both to its magni-
tude and the intensity of interest which it will command in the
public mind.2
The finances of the internal improvement operations (as before
suggested,) not being confided to this department, the undersigned
refrains from more than hinting at the importance of the subject.
— I feel it my duty however, to add my conviction, that if both
the action of the general assembly and the future prosecution of
the public works shall not be so directed, as shortly to produce
from other sources than taxation, an amount sufficient to cover
some considerable portion of the interest thus rapidly accumu-
2 Provision was made in the general revenue bill passed at this
session for a tax levy of 30 cents on each $100 of taxable property, most
of which was to be used for interest payments. Laivs of Indiana, 1838-39
(general), pp. 27-28.
Treasurer's Report, December 10, 1838 213
lating, and which must be discharged that neither the treasury,
nor the ability or patience of the people will be able to bear the
overwhelming load of interest, for the payment of which the
public faith is sacredly pledged.
The Lawrenceburgh and Indianapolis rail road company, made
application to the undersigned in the month of May last, for the
appointment of commissioners to value real estate to be mortgaged
to that company, with a view of being assigned to the state in
exchange for state bonds under the provisions of the improve-
ment act of 1836.3
By the report of the company made to the last general assembly,
it appears that at that period, the company had (principally out
on loan,) nearly $200,000 the avails of former bonds issued to it
by the state.
It is also stated in the same report, that the company had for
the present, suspended operations on that work, with the excep-
tion of one or two contracts not cancelled, and that the work
would be resumed only upon contingencies not probable soon to
happen.
With these facts officially before me, together with the manifest
import of the act, as conveying the intention of the legislature in
lending the credit of the state in this case; for the sole object of
aiding in the construction of that public work, and no other, it
appeared to me that the company had no just claims, at the pres-
ent, for the issue to it of any further amount of state bonds.
Under this conviction, and by the advise of the executive, the
undersigned signified to the company, that he would take no action
in the matter at the present, but would postpone the business
until the meeting of the general assembly.
In view of the great responsibility resting upon the treasurer of
state in this matter, and the peculiar delicacy of his duties, arising
from this state of things, I respectfully submit the propriety of
such legislative action as will relieve the undersigned from the
difficulties which are so apparent in this collision between him and
the company.4
3 See above, 136, 137-38.
4 In a joint resolution approved February 15, 1839, the Treasurer of
214 Wallace Papers
The various operations in the different departments of the loan
office, have been conducted with that safety and thrift to the
funds which have heretofore characterized their progress.
In revising the loan office laws at the last session, the act then
passed (through inadvertency, I presume,) changed the interest
to be charged on loans of the college fund, back to 6 per cent,
per annum.
Not doubting but this change was unintentional on the part
of the general assembly, the undersigned, in order to avoid loss
to the fund, has run up the loans of that fund to a considerable
amount in advance of the money of that particular fund on hand,
previous to the publication of the laws.
I suggest the propriety of passing a law as speedily as may be,
placing this fund upon the same footing as to the interest to be
charged on loans, as is authorized in other departments of the
loan office.5
The condition of the several agencies for loaning the surplus
revenue, will shortly be laid before the legislature, in a general
abstract of the operations of the different agencies.6
The undersigned was notified by the cashier of the State Bank,
in May last, that that institution would advance to the state the
4th instalment of the surplus revenue of the United States, under
the provisions of the act of the 17th of February last, and that the
amount of $286,751 48 was subject to the order of the treasurer
of state.
State was instructed to withhold the issuance of any further state bonds
to the railroad company. Within sixty days the company was to surren-
der its charter, and all its affairs were to be settled within a year. Bonds
and mortgages heretofore assigned to the state by the company were to
run to maturity, the interest on same, at the rate of 5% per cent, to be
paid semiannually to the Lawrenceburg Branch Bank. Laivs of Indiana,
1838-39 (local), pp. 357-58.
5 By an act approved December 31, 1838, the College Fund as well as
all other funds authorized to be loaned by the Treasurer of State were
to be loaned at 9 per cent interest per annum. Laws of Indiana, 1838-
39 (general), p. 84.
6 See the report of the treasurer in relation to the surplus revenue,
in Documentary Journal, 1838-39, No. 21, and Senate Journal, 1838-39,
pp. 175-93.
Treasurer's Report, December 10, 1838 215
That amount was accordingly received of the State Bank on
the 17th day of May last, and on the same day paid over to the
Sinking Fund Commissioners, according to the provisions of
said act.7
The 38th section of the probate law, which requires adminis-
trators of estates without known heirs, to pay into the state treas-
ury the residue of the estate, after paying debts, is very deficient
in not requiring the State to be made a party in the suit that is
authorized to be brought on the petition of the heirs for a decree
that the money be paid over to them by the treasurer of state.
Under the present law, the proceeding is altogether ex parte,
and it is apprehended that some proceedings have already been
had, which may subject the state to pay a second time, the money
which had been placed with the state as trustee of the unknown
heirs. I respectfully suggest that the law be so amended as to
require the auditor of public accounts to be made a party to any
such suit, and that it shall be the duty of the prosecuting attornies
to defend the state in such cases.8
The payments on account of the state house, and incidental
expenses of the last general assembly, liquidated under the act of
last session, amount to about $850, nearly one half of which has
been on account of the latter. A schedule of the whole will
shortly be laid before the legislature.
All of which is respectfully submitted.
N. B. Palmer,
Treasurer of State
7 The fourth installment of the surplus revenue was never paid by
the United States Treasury Department. The sum advanced to the
Treasurer of State by the State Bank was carried as a debt against the
state.
8 There was no legislation on the subject at this session.
216 Wallace Papers
STATEMENT A— COLLEGE FUND
REPORT of the operations of the College Fund, from the 1st
December 1837, to the 30th November, 1838
RECEIPTS.
Cash on hand at last report $ 648 58
Amount received from William Alexander, commis-
sioner of reserve township in Monroe county 1,902 00
Amount received from James Smith, com'r of reserve
township in Gibson county 250 00
Loans refunded 5,547 00
Interest on loans 4,653 95
Amount overloaned 1,715 42
14,716 95
CONTRA.
Amount of loans as per list accompanying $14,256 00
State seminary, including incidental expenses 460 95
14,716 95
STATEMENT B— SALINE FUND
REPORT of the operations of the Saline Fund, from the 1st
December 1837, to the 30th November, 1838.
RECEIPTS.
Cash on hand at last report 201 46
Amount received from Andrew Wilson, commissioner
of saline lands in Orange county 2,385 30
Amount received from Henry Young, commissioner
of saline lands in Washington county 618 97
Amount received from Milton McPhetridge, com-
missioner of saline lands in Monroe county 57 25
Interest on loans 2,061 97
Loans refunded 1,300 00
Amount overloaned 234 96
6,859 91
Treasurer's Report, December 10, 1838 217
CONTRA.
Amount of loans as per list accompanying $ 6,715 00
Saline Fund expenses 144 91
6,859 91
STATEMENT C—
CONGRESSIONAL TOWNSHIP FUND
REPORT of the operations of the Congressional Township
Fund, from December 1837, to 30th November, 1838.
RECEIPTS.
Cash on hand last year $ 295 90
Interest on loans 117 00
Amount received from school commissioner of Ripley
co 75 00
487 90
CONTRA.
Amount of loans $ 100 00
Incidental expenses 19 65
Am't paid school commissioner of Ripley county 53 71
Am't paid school commissioner of Green county 70 08
Cash on hand 244 46
487 90
Contingent expenses from 1st December 1837 to 30th
November 1838.
Paid John A Matson commissioner for running the
line between this and the state of Ohio 57 00
L. M. Johnson, transportation of public docu-
ments 4 05
Levi Comeyges repairs on Governor's Circle 10 50
N. B. Palmer, one years subscription for Bick-
nell's Reporter 3 00
Miles R. Payne for furniture for Auditor's office 50 00
John Cain for postage 78 67
218 Wallace Papers
W. Olvy, repairs on Governor's Circle
Wm. Parker, repairs on Governor's Circle
Tho. Hoagland, repairs on Governor's Circle ....
W. J [F.] Reynolds for enclosing Tippecanoe
battle ground
S. W. Maddock for transportation of public arms
Asa Hutson on Governor's order
Davis Miller on Governor's order
Douglass Maguire, private secretary of Governor
John Cain for postage
N. O. Elson, transportation of public arms
Espy & Sloan, furniture for Secretary's office
Wilson, Hazlett, & Morris, Locks for Governor's
House
Jacob Doty for transportation
James Coffee, repairs on Governor's circle
John Cain for postage
E. Atkinson, transportation of public arms
D. Wallace, expenses attending removal of
Indians
John Cain for postage
A. W. Morris, investigating college fund at
Bloomington
C. & J. Cox, repairs on Governor's circle
Stacy & Williams, blank book for Auditor's
office 14 75
Samuel Wilson, storage and commission on public
documents 50
W. H. Talbot & co. stationary 3 56
1
50
5
75
2
00
573
75
18
00
5
00
5
00
50
00
68
36
3
48
40
00
6
00
1
00
5
00
80
00
3
45
33
00
67
63
11
00
10
37
$ 1,212 38
9
9 The omitted portion contains the amount paid for stationery, trans-
portation, etc., and a list of the borrowers of the College and Saline
funds.
Report of Fund Commissioners, December 18, 1838 219
Wallace to Speaker of the House1
Executive Department,
Indianapolis, Dec. 13th, 1838.
Hon. Th. J. Evans, Speaker of the House of Representatives :
Sir: — Through the medium of the Chair I inform the House
of Representatives, that John M. Wallace2 is appointed private
Secretary, and that he is authorized to make communications from
this department to the Legislature during the session.
David Wallace
Fund Commissioners: Annual Report1
Office of Fund Commissioners,
Indianapolis, 18th Dec, 1838.
To the General Assembly of the State of Indiana:
The fund commissioners of the state of Indiana respectfully
report: That since the adjournment of the last session of the
General Assembly, they have, in pursuance of the requisitions of
the Board of Internal Improvements, sold certificates of state
stock, bearing an interest of five per cent, per annum, to the
amount of one million eight hundred thousand dollars, to-wit :
On the 11th June, they sold to the Staten Island
Whaling Company $ 40,000
6th July, to the Bank of Western New York 300,000
24th October, to the Bank of Erie county, New York 100,000
1 House Journal, 1838-39, p. 106.
2 John Milton Wallace was a younger brother of the Governor. The
legislature apparently put its stamp of approval on the appointment
by passing an act (approved February 16, 1839) creating the office of
private secretary with an annual salary of $150. Laivs of Indiana, 1838-
39 (general), pp. 92-93.
1 Senate Journal, 1838-39, pp. 161-65. For additional information on
the transactions of the Fund Commissioners as reported here, see the
correspondence between the commissioners and their testimony before a
House investigating committee in Documentary Journal, 1841-42, House
Doc. No. 12, pp. 273-90.
220 Wallace Papers
24th October, to the Detroit and Pontiac Rail Road
Co 100,000
16th Nov., to the Staten Island Whaling Co 60,000
28th Nov., to the Morris Canal and Banking Co 1,200,000
Making in all $1,800,000
The whole amount were sold at par, except two hundred thou-
sand dollars sold to the Morris Canal & Banking Company, which
were sold at ninety cents, making the whole amount receivable by
the state upon the stocks sold, one million seven hundred and
eighty thousand dollars. One million of the stocks sold to the
Morris Canal and Banking Company are sterling bonds, payable
in London and the residue sold are payable in the city of New
York. The amount yet due upon the sales is payable at such
periods as the Board supposed would be requisite to meet the
expenditures upon the public works, and for the payment of the
whole amount collateral security has been taken, except for the
amount due from the Morris Canal and Banking Company which
is $700,000, they having advanced $500,000 before the sale.
Notwithstanding the sales made during the present year, have
been upon terms less favorable than those of the last year, owing
to the deranged state of the monied concerns of the country, the
great increase of state stocks which have been brought into mar-
ket, and the reduction in the price of exchange upon Europe ;
yet the high credit and character which our state has heretofore
so justly acquired has been fully sustained, and her stocks have
been sold upon terms as favorable as those of any other western
state.
The Board would respectfully suggest, that as the interest upon
the public debt has already increased considerably beyond the
amount provided by taxation and otherwise, to meet it, and as
the completion of the works now in progress of construction will
require a still greater increase; the necessity of providing some
other means than those already appropriated for that purpose is
such as to call for some legislative enactment upon the subject.
The payment of the interest out of the money borrowed, in addi-
Report of Fund Commissioners, December 18, 1838 221
tion to the disadvantages which must result from it on the score
of economy and its rapid increase of the public debt, will be
calculated seriously to affect the credit of the state, and must
greatly increase the difficulties of making advantageous loans.
If a fund were created and profitably invested in bank stock, or
otherwise, the dividend upon which should be exclusively applied
to that purpose, in aid of the amount which might be raised by
taxation, and which would satisfy the holders of the bonds of
the State, that the interest accruing upon them could be promptly
met, without depending upon further loans for that purpose, the
credit of the state would be enhanced and the sale of her stocks
upon fair terms rendered less subject to doubt.
The means provided for the payment of interest is always a
subject of inquiry with the purchasers of state stocks, and an
ample and permanent provision for that purpose, will increase
the demand for the stocks of those states which have made it.2
In compliance with the terms of an act of the last session of
the General Assembly, the Board have compromised with the
Messrs. Josephs and Cohens, and released them from their lia-
bility to the State on account of bonds sold to the Messrs. Cohens,
in consideration of the payment of money, assignment and transfer
of stocks and property, as follows, to wit :
Cash paid by Messrs. Cohens $ 14,715 00
Bonds of the Messrs. Cohens, secured by mortgage
upon real estate in Baltimore for 65,000 00
payable five thousand dollars per annum from 1st
Jan. 1838 for five years, and the residue in ten
years, with 6 per centum interest
Bonds of the Winchester and Potomac rail road
company, with one years interest due on them 46,640 00
751 shares of stock in the Baltimore and Ohio rail
road company, on which had been paid $85 to the
share, and which was worth at the market price 26,000 00
2 The Senate committee on the Canal Fund, to whom this part of the
commissioners' report was referred, reported that the best policy to pur-
sue at this time was to increase the banking capital and appropriate the
dividends arising therefrom to the payment of the interest on state stocks.
Senate Journal, 1838-39, p. 359.
222 Wallace Papers
An assignment by the Messrs. Cohens of an attach-
ment levied upon fifteen hundred shares of stock
in the American Life and Trust Company, five
hundred shares of stock in the General Insurance
Company, and two hundred and thirty shares of
stock in the Canton company, and which if suc-
cessful will produce 50,000 00
52 lots in the city of Brooklyn upon which is erected
a sperm and candle manufactory, the whole esti-
mated at one hundred thousand dollars, but subject
to a mortgage for 35 thousand dollars, leaving .... 65,000 00
565 lots in the 12th ward of the city of New York,
and fourteen acres of land in the city of Pough-
keepsie, which is estimated at one hundred and
forty-four thousand dollars, but subject to mort-
gages to the amount of eighty-four thousand dol-
lars, leaving 60,000 00
An assignment of the interest of the Messrs. Josephs
in the George's creek Coal & Mining Company, on
which they had paid one thousand dollars.
At the time the compromise was made, the amount
due from the Cohens & Josephs was 312,279 73.
The amount received and secured, and the amount
claimed under the attachment assigned, if success-
ful (of which there is a very strong probability)
together with the property transferred at the
foregoing estimates, is 327,355 00
being an excess beyond the debt of fifteen thousand
and fifty-seven dollars, twenty-three cents.
The estimates of the value of the property must necessarily
be to some extent conjectural, but they are based upon the best
data in the power of the Board to obtain, and they confidently
entertain the opinion that the property and stocks received, will
ultimately indemnify the state against any loss.
In addition to the property above specified the Board received
a mortgage upon property in Poughkeepsie which had been sold
upon a previous mortgage, but which they had a right to redeem
Report of Fund Commissioners, December 18, 1838 223
upon the payment of the first mortgage, but on examining the
property they were satisfied it was not worth more than the
amount of the first mortgage and therefore did not redeem it.
The Board have paid out the following sums on account of the
property received on the compromise, to wit:
For Insurance $ 222 65
For taxes 52 31
For improvements 382 96
For agency in superintending property 100 00
For corporation assessments 289 94
For instalments on Baltimore and Ohio rail road stock 11,265 00
For Counsel fee for conducting suits, examining titles,
&c 603 96
For discharge and satisfaction of mortgage on prop-
erty in Brooklyn, with interest 35,612 50
For discharge of one-half of mortgage on property in
New York 33,150 00
For discharge of mortgages on property in Pough-
keepsie 6,800 00
For interest due on mortgages 8,642 36
Amounting to $97,121 68
The sperm and candle manufactory, with its fixtures, situate
on a part of the Brooklyn property, is calculated for carrying on
that business on an extensive scale, and the improvements are
worth about $30,000. At the time they were taken possession of
by the Board, they were in a state of rapid waste and decay, not
having been occupied for two years. Finding it impracticable to
lease the property without affording some means for its being
put in operation, the Board effected an arrangement with the
Staten Island Whaling Company for a lease of the premises for
five years from the first of August, at an annual rent of $5,000,
by loaning them bonds of the Winchester and Potomac Rail Road
Company, and part of the amount received from the Messrs.
Cohens, sufficient to make up $52,000, payable in five years, with
six per cent interest payable semi annually, amply secured by bond
224 Wallace Papers
and mortgage on real estate. The Company is now in successful
operation, and the property in an improved and promising con-
dition.
In taking securities on real estate, in the foregoing transactions,
they have in some instances been taken in the name of the state,
and in others to one of the Board in trust for the state. To cancel
the mortgages on payment of the money secured by them, or to
convey the real estate on a sale, an act of the Legislature is
deemed requisite.'5
All which is respectfully submitted,
Issac Coe,
Caleb B. Smith, I Fund Commissioners.
James Farrington, I
Treasurer of State : Report on Surplus Revenue1
Treasurer's Office,
Indianapolis, Dec. 18, 1838.
Hon. David Hillis, President of the Senate:
I herewith communicate to be laid before the Senate, a report
of the operations and condition of the Surplus Revenue of the
United States, deposited with this State under the provisions of
the act of Congress of the 23d June, 1836.
Very respectfully, your ob't. serv't.,
N. B. Palmer,
Treasurer of State.
On the 6th May last the Treasurer of State was notified by
the Cashier of the State Bank of Indiana, that that institution
had accepted the proposition of the last General Assembly, con-
tained in the act of the 17th of February, 1838, in relation to
the 4th instalment of the Surplus Revenue; and that the amount
of such instalment being two hundred and eighty-six thousand
3 An act was passed authorizing the Fund Commissioners to cancel
mortgages and convey real estate held by the state outside the boundaries
of the state. Laivs of Indiana, 1838-39 (general), p. 64.
i Senate Journal, 1838-39, pp. 175-77.
Report on Surplus Revenue, December 18, 1S3S 225
seven hundred and fifty-one dollars and forty-eight cents, was
subject to the order of the Treasurer of State.
In accordance with the notice thus given, and the provisions
of the act aforesaid, the undersigned received from the State Bank,
on the 17th May, 1838, the sum of $286,751 48, and forthwith
paid the same over to the Commissioners of the Sinking Fund.
The accompanying abstract will exhibit the situation of the
Surplus Revenue distributed among the several counties, so far as
the undersigned is able to communicate from the reports which
have reached this office from the Loaning Agents. It is to be
regretted that several of the agents neglected to make their quar-
terly reports to this office as is required by law.
By the act of 6th February, 1837, the agents appointed were
required to give bond to the board doing county business, and
the clerks to certify to the Treasurer of State that the Agent
had so entered into bond. The act of last winter appoints agents
anew, but is silent in relation to their giving bond and security.
As but few of the clerks have forwarded certificates of their
agents having entered into bond and security, the presumption is,
that in most cases it has been neglected, as the opinion is enter-
tained by many that the bond given under a former appointment
would be valid under a subsequent one, an opinion altogether
erroneous as the securities cannot be legally held responsible for
official acts of the principal under new appointment, and beyond
the period for which they agreed to stand bound for him. I
make these suggestions with a view of bringing the matter to the
notice of the General Assembly that such legislative provision
may be made as will secure the public interest in this particular.2
Owing to some ambiguity in the law in relation to the com-
pensation of the agents, a discrepancy in practice prevails as to
the compensation taken by the agents. The act of 1837, clearly
gave the agents one per cent, on the entire amount loaned, at the
commencement of the operation ; but as in the succeeding years
2 A law was enacted at this session requiring each loaning agent of
the surplus revenue to give bond and security in the amount requested by
the county commissioners in the county in which the agent was serving.
Laws of Indiana, 1838-39 (general), pp. 30-31.
226 Wallace Papers
but one third would be paid in and re-loaned, in each year, the
compensation would be so reduced and inadequate as to cause
many of the most valuable agents to resign their posts. It was
undoubtedly the intention of the legislature to allow the agents
one per cent, per annum on the entire amount on loan in their
agency, and that the borrower should annually pay 9 per cent,
interest, one of which should go to the agent ; but as the bonds
and mortgages are taken for only 8 per cent, per annum, the
borrowers in some instances in liquidating their second years in-
terest, refused to pay more, and the agent thereby looses a por-
tion of the compensation to which he is justly entitled.
I respectfully suggest the propriety of so amending the law in
this respect, as to insure to the agents the compensation intended,
which if fully realized is but a small recompense for the labor
and responsibility imposed.3
The aggregate amount of interest on the amount of this fund
under the control of the loaning agents, estimating it at 8 per
cent, which is the net income of this fund, is $45,370 09.
It will be perceived by reference to the following abstract of
the operations of the several agencies, that only $41,674 36 has
been paid to the agents the present year, leaving a deficiency in
the payment of interest to the amount of $3,695 73.
This at 8 per cent, is the interest on about $46,195 86, which
amount may be regarded in the character of suspended debt.
What amount of this is in suit I am not able to state, as most of
the agents have failed to give information of the particular
condition of the debt on which the interest remained unpaid.
In 1837, the fund was loaned in proportions of about 6 parts on
personal security to 1 part on mortgage security. It will be seen
that in 1838, under the provisions of the act of last session, the
loans have been made about 3 parts on personal, 2 parts on mort-
gage security, being a great improvement in the security of the
fund. The undersigned cannot refrain from urging, that the
security of this fund will be greatly improved by encouraging
3 The law was amended in accordance with this suggestion. Laws of
Indiana, 1838-39 (general), p. 31.
Report of Internal Improvement Board, December 20, 1838 227
this change from personal to mortgage security, as no inconsider-
able portion of that on personal security will be ultimately lost.
Respectfully submitted,
N. B. Palmer,
Treasurer of State.
State Board of Internal Improvement: Annual Report1
[December 20, 1838]
To the General Assembly of the State of Indiana:
The State Board of Internal Improvement have the honor to
submit herewith the Report of their Principal Engineer, which
embraces a full detail of the various operations on the public
works of the State since the last annual Report of the Board, and
their present condition, including his views upon the incidental
branches of the service.2 It will be found, it is believed, that
neither on canals or roads has there been wanting promptitude or
energy, and that the prosecution of the system has been advanced
as rapidly as the public expected and prudence would permit.
By October next, the Wabash and Erie canal will probably be
completed from Lafayette to the Ohio line; and, as it is expected,
the balance of the route also from that point to Maumee bay,
as provided for by compact with that state; thereby creating a
new and desirable channel for the commerce of the Valley of the
Wabash, and a thoroughfare between the eastern and western
extremes of the Union, unrivalled in its advantages. The facili-
ties on this route, however, will not be consummated until the
entire work is completed as contemplated by law, affording a
certain intercourse, by the same means, to the Ohio river. In
the spring, the White Water canal from Lawrenceburgh to
Brookville will be finished and ready for navigation ; and the
New Albany and Vincennes road, from the former place to
Paoli, will be completed ; all of which will thenceforth yield an
1 Senate Journal, 1838-39, pp. 245-52.
2 For the engineer's report, see ibid., 253-93.
228 Wallace Papers
income to the state, and impart in some measure a cheerful influ-
ence upon the great enterprise in which the state is engaged.
The Madison and Indianapolis rail road is also completed and
in use, from the inclined plane at the former place to the vicinity
of Vernon, and will be as productive as might be expected
between those two points. The locomotive now in use upon the
road, is not the property of the State; it being believed that the
one purchased for this purpose has been lost by the wreck of the
vessel on which it was shipped ; but, as ample insurance was taken,
the state will in the end sustain no loss, except in the want of it
for the present use. The appropriation originally made upon this
work, has been all applied, and of course it will be out of the
power of the Board to extend it, without some additional legisla-
tive sanction, which they earnestly recommend. How far this
can be done, without authorizing upon one point an expenditure
productive of sensitiveness at others, belongs exclusively to the
deliberations of the General Assembly; but in their wisdom to
devise some course by which an ample appropriation shall be
made upon this road, without injustice to other interests, the
Board have every confidence.3 Already a large amount of money
has been invested in its construction, but that investment having
been upon the heaviest work at its southern extremity, only a
short distance of this line is in exhibition. A prominent fact is,
that the 26 miles already under contract, and nearly completed,
will probably equal in cost the remaining 60 miles of the road.
At other points, important divisions of work are nearly com-
pleted; to wit: at Indianapolis, Terre Haute, and Evansville ;
and although these will not, for some time be productive in tolls,
except in a very limited degree, yet the water power they afford
will furnish a very considerable income to the state, in an aggre-
gate not less than twenty-six thousand nine hundred dollars
annually, when the whole power is leased ; this estimate being
predicated upon some leases already made, and upon the prices
which have obtained elsewhere.
The policy which governed the Board in their incipient opera-
tions, in putting these divisions of work under contract, has been
3 See above, 166.
Report of Internal Improvement Board, December 20, 1838 229
repeatedly explained and submitted ; and as there has not been,
within the knowledge of the Board, any act of the General
Assembly by which it could be considered as deprecated, there
was reason to believe it had been approved of.
New work has been put under contract, (in addition to the
lettings previously authorized, and of which the General Assembly
has been advised,) as follows: On the Wabash and Erie canal
north of Lafayette, thirty-five sections; and south of Lafayette,
in the vicinity of Covington, five sections; on the Central canal
north of Indianapolis, thirty-nine sections; and south of Indian-
apolis, twelve sections, including what is designated as the
southern division of said canal ; on the White Water canal, forty-
eight sections; and on the Erie and Michigan canal, ten sections;
on the road from Jeffersonville to Lafayette, between the latter
place and Crawfordsville, twenty-seven sections; and between that
point and Greencastle, fifteen sections; and from Salem to New
Albany, thirty-three sections; on the New Albany and Vincennes
road, between Paoli and Mount Pleasant, twenty-five sections;
and on the Madison and Indianapolis rail road, four sections.
On the Northern, or Erie and Michigan canal, it will be recol-
lected, that there has been some delay, which caused the citizens
in that quarter to manifest great dissatisfaction ; and their repre-
sentatives to press upon the Board, from time to time, the ex-
pediency and necessity of a commencement of operations forth-
with. This delay was from no unfriendly spirit in the Board,
but from the uncertainty, after various reconnoisances and exam-
inations had been made, as to the actual supply of water, and
the most eligible route. The country was new, and its localities
and resources not well known ; it required a minute exploration ;
and as in addition, the work when once commenced, could not
be easily altered, and was to be regarded as a monument both
of the skill and enterprise of the age, the Board preferred to
stand for a time, the brunt of popular displeasure, sooner than to
act precipitately. The commencement and progress of the work
now manifest that the difficulties which caused them to pause,
are removed from the minds of the Board. It is impossible to look
at the map without being struck with the importance of this
230 Wallace Papers
canal, and the effect it must have in diverting the commerce which
now floats upon the Lakes, and has to undergo a tedious, stormy,
and dangerous circumnavigation before it can reach Chicago. But
to realize this importance, it must be connected with the Illinois
canal, and the Board respectfully suggest to the General Assembly,
to have some arrangement set on foot, for the purpose, so that
the two states, in making the contemplated junction, may act in
unison.4
In fact, Illinois has anticipated Indiana in this matter, by having
already run, with this object in view, a line to the boundary of
the two states, at the supposed point of approach on the part of
Indiana, thereby inviting her to do what her duty, interest, and
character, seem to require. She has on several occasions, mani-
fested a lively disposition to unite the destiny of some of her
public works with ours, and seems to have been uniformly actuated
by a sense of exalted liberality. It will be recollected, that the
first appropriation made by this state, for the improvement of the
Wabash, was promptly met by Illinois; and that subsequently,
when this state appropriated $50,000 towards the same object,
the call was answered by Illinois, with an appropriation of
$100,000. In connection with these facts of mutual friendliness,
the Board beg leave to invite the attention of the General Assem-
bly to the advances made by Illinois to this state upon the Upper
Wabash. She has ordered a Railroad to be constructed from
Alton on the Mississippi, thence through the heart of the state,
and finally through Paris to the boundary of the state in the
direction of Terre-Haute, with a view of connecting with our
public works at that place. The distance from the terminating
point at the boundary line to the latter place being only seven
miles. She has also directed that a branch of the same road,
running through the northern interior, should be constructed
4 By joint resolution of the General Assembly, Governor Wallace
was directed to inform the Governor of Illinois that an act had been
passed authorizing the survey of that part of the Erie and Michigan
Canal necessary to connect it with the branch canal contemplated to be
built in Illinois, thus making a link between the Michigan and Illinois
Canal and the Erie and Michigan. Laics of Indiana, 1838-39 (local),
p. 357.
Report of Internal Improvement Board, December 20, 1838 23 1
to Danville, with a view of forming a connexion with the works
of Indiana at Perrsyville or Covington, or at some point further
north. These works are now being constructed by her, and under
contract at Danville ; and between Paris and Terre-Haute, the
grading, culverts, bridges, and all things preparatory to laying
the rails, are nearly completed up to the boundary line; but there
the intended intercourse is, for the present, put a stop to, as
Indiana has taken no steps to meet her in her march of improve-
ment. The board need not remark that the great advantages
accruing to this state, by a connexion at any or all the points
mentioned, are palpably manifest. They beg to be excused for
further suggesting, that if it should be the pleasure of the General
Assembly to entertain these subjects, any appropriation made
might not be considered as swelling the amount of ten millions
originally appropriated for the proceeds of the canal grant from
the mouth of Tippecanoe, will, of themselves, if realized, more
than complete the canal to its junction with the Central canal,
leaving untouched the specific appropriation of one million three
hundred thousand dollars, now included in the ten million appro-
priation. An arrangement, including these objects both in the
north and south, could be entered into at the same time, and
doubtless effected upon some basis of reciprocity mutually accept-
able to the parties.5
On the northern division of the Central canal, the Board have
had doubts as to the most eligible route, and from time to time
have been so embarrassed by the results of successive surveys, as
to excite the apprehension of great delay and disappointment;
but the route has been at last permanently adopted along the
valley of White river, and passes through both Noblesville and
Andersontown.
In relation to the desired connection between the Central and
Whitewater canals, the Board have no further information to
5 The General Assembly passed a bill granting the state of Illinois
the privilege of connecting the Northern Cross Railroad in Illinois with
the Wabash and Erie Canal at Covington; the work was to be begun
in three years and finished in ten. Laics of Indiana, 1838-39 (general),
pp. 78-79. The railroad was never built, however.
232 Wallace Papers
submit in addition to that contained in their last annual report ;
and respectfully invite the attention of the General Assembly to
the subject; the more especially as, during their last session, it
was in contemplation, by some of those immediately interested, to
substitute a different kind of improvement from those originally
intended.
The canal route between Hagerstown and the Cumberland
road has been permanently established.
On the Jeffersonville and Crawfordsville road, two lines have
been run between Greencastle and Spencer, and enough ascer-
tained to satisfy the board of the entire practicability of passing
through the latter place; but as it is said that there is another
route to Spencer not yet surveyed, more eligible, the permanent
location is postponed until the season will permit further exam-
inations.
On the line between Paoli and Vincennes, there has been con-
siderable excitement in consequence of the entire line between
these points not being put under contract. During the winter
session of the board, they adopted a resolution, "that the acting
commissioner on the New Albany and Vincennes M'Adamised
road, be and hereby is authorised to put under contract the grub-
bing, grading, and bridging of said road between Paoli and Vin-
cennes, and the preparing of the metaling of said road6 east of
Paoli, all to be let in such manner, and in such places, as the
Commissioner and principal Engineer may think best for the
interest of the state, not exceeding in all $300,000." At their
session in June afterwards, a majority of the Board put a con-
struction upon this resolution, applying said appropriation in the
first place to the east end of the road, in preparing and putting
6 The application of gravel or crushed stone to a road bed was known
as metaling. According to the specifications, the stone was put on in
two coats, the first six inches in thickness, the second one inch. After
each coat was applied the stone was rolled with a heavy roller. Testi-
mony of an engineer on the road before a Senate investigating commit-
tee, in Documentary Journal, 18+1-42, Senate Doc. No. 6, pp. 551-52.
A macadamized surface was produced by combining crushed stone with
sand and silt (or clay) and moistening it to form a compact layer six
to twelve inches thick. Dictionary of American History (5 vols. +
index, New York, 1940), 3:9.
Report of Internal Improvement Board, December 20, 1838 233
the metal on the same, directing the excess, whatever it might
be, to be applied on the west end of the road, thereby lessening
the expected operations upon it between Paoli and Vincennes.
The Board cannot but regret that they should have given any
cause for this excitement, but feel a thorough consciousness that,
in the course pursued by them, they were impelled only by a
sense of duty to the state.7
In the general statement of work put under contract, it has no
doubt been observed that, in some instances, operations have been
commenced at remote points upon the same line, for which the
conduct of the Board has been impugned under a general charge
of scattering the works over the State. Is the allusion to the divi-
sion of work at Terre Haute? If so, the annual reports of this
Board in 1836 and 1837 are referred to in explanation, in which
will be found the specific reasons for the measure, the justness
of which has never been heretofore questioned by official author-
ity. Is it to the division at Indianapolis? Besides the above ref-
erence, the Board would inquire, is it not desirable to have this
entire northern division, extending to the Wabash and Erie
canal, finished simultaneously with the rail road from Indianapolis
to Madison, thus affording facilities of travel and commerce
between the Lakes and the Ohio, in this direction, and making
the entire thoroughfare profitable? Or, leaving the public interest
out of the question, would the citizens north of Indianapolis,
locked up as they are in the interior, be willing to wait until
they were reached by the Central canal in its slow approach from
the Ohio river, necessarily slow from the length and heavy work
on that part of the route? Is the charge intended to apply to the
work commenced near Covington ? The lettings there embrace
only some of the heaviest work on the line, and it is expected
that the entire route between that place and Lafayette will be
finished about the same time ; and as the canal from the north to
" This change of plans aroused the anger of Representative Samuel
Judah, of Vincennes, since it violated promises made to him the previous
winter by a majority of the members of the internal improvement board.
Judah attacked John G. Clendenin, the member of the board responsible
for work on the road, in a number of letters that appeared in the Vin-
cennes Western Sun & General Advertiser, August 11, 1838 ff.
234 Wallace Papers
Lafayette is being completed, to stop the canal at that point, or
continue it in the south, was the alternative presented.
A careful examination of the character of the several works in
the State, without a single exception, shews that the operations
upon each line must be in some degree separated, for the very
obvious reason, that on each line there is a diversity of topograph-
ical presentations. To commence a section of simple excavation
where there is merely enough of cutting to make the banks, and
at the same time to commence a heavy bluff section, or mechanical
structure of rock or wood, with a view to complete as they
advanced, would be as bad a sample of economy as could well be
adduced. While three or four months would only be necessary to
perform the labor on the plain section, nearly as many years
would be requisite in reducing the hills, and in procuring ma-
terials and rearing appropriate mechanical structures ; the con-
sequence of which would be the necessity of the payment of
interest on the cost of light sections finished, and which would
lie idle for years, subject to decay and injury, awaiting the fin-
ishing of the heavy work. Until, then, some plan can be devised
whereby mountains can be removed with the same facility that
plains can be crossed with public works, it will be impossible to
move as the mole moves, completing as it advances. Again, is
the allusion to the work between Lafayette and Crawfordsville,
and the latter place by Greencastle to the Cumberland road?
The great outlet for this populous and productive region of
country is at the Wabash, and their heavy trade in commercial
pursuits is carried on through that channel. Must they also wait
upon the slow march of internal improvement from the Ohio
river? Let it not be overlooked, that McAdamized roads are
not, of themselves, a profitable investment; that they do not yield
a percentage in proportion to canals and rail roads, but that their
great benefit is in their wide spread stimulus to agriculture —
to the farming interest in all its departments, equalizing com-
munities, and never failing to improve and enrich the country
through which they pass.
The States of Pennsylvania and Kentucky furnish ample evi-
dence of this fact ; and the latter, in prosecuting her views of
Report of Internal Improvement Board, December 20, 1838 235
enterprise and patriotism, is now pressing forward with improve-
ments of this character to every section of the Commonwealth.
Besides these advantages to be promptly realized upon this
division of work, it will be seen upon reflection, that this work
will be made tributary to another public work, of a kind that
generally yields a good profit, to the Wabash and Erie canal, to
which its travel and trade have a natural tendency, thereby
giving harmony to the system, and imparting to it a genial and
sustaining influence. Indeed, so well satisfied was the General
Assembly of the correctness of these views, that they were unwill-
ing to trust to any discretionary power in the Board, and at the
last session by legislative enactment, positively ordered this work
to be put under contract from Crawfordsville to Lafayette. It is
not, therefore, the Board humbly conceive, in their policy in
commencing operations at certain points, that they have erred. The
true cause of complaint, the startling amount of disbursements,
springs from the extensiveness of the system and the inherent qual-
ities of the compromise betzueen the different sections of the state,
upon which it was predicated. The Board have been impelled
by a current they could not resist.
As to the best means to be adopted to circumscribe operations
hereafter upon the public works, and curtail expenditures, that is
an important matter, peculiarly within the province of the Gen-
eral Assembly in their supervisory power over all the respective
interests of the State. It is for them, if they please, to order;
for this Board to obey. Is the board of internal improvement to
continue as at present organised? If so, the representative prin-
ciple may shew itself. Is it to be reduced to three members, thus
devolving upon them the power and duty of classification? If
so, what works shall have precedence to the exclusion of others?
where shall the labor be stopped, and at what point concentrated ?
And when the knife is applied to the system for the present, and
the work done, will the parties to the compromise be better
satisfied than at present, and magnanimously bear, without a
murmur, the general pressure of taxation?
The Board, in deference to the General Assembly, will not pre-
sume to venture further upon this subject, than to assure the
236 Wallace Papers
General Assembly that any or all of them, now as heretofore,
will cheerfully pursue any course in the management of the public
works, which may be indicated as their wish, however prolific it
may be in responsibility to the members of the Board individually
or collectively. There is another branch of this subject which the
Board feel constrained to introduce to the attention of the Gen-
eral Assembly, and that is, in relation to a Principal Engineer ;
an officer who, in the opinion of some, may be dispensed with,
without detriment to the public service. They would, speaking
from their experience, deplore such a result, as they do solemnly
believe that such a change in the engineer department would
inflict a deep and abiding wound upon the system, beget jealousies,
mar the harmony of the works, and greatly increase their expense.
They will here remark that the officer now in service in that
capacity,8 and who has the continued confidence of the Board,
has been unremitting in his application to the duties of his station,
and in his career of usefulness has furnished a system for the
location and construction of McAdamized roads, containing im-
portant principles, which have been approved of in practice, and
promise the realization of great advantages to the State. His
pamphlet upon that subject is herewith transmitted.
The Board expected to have been able at this time to lay before
the General Assembly the report of the engineer in the joint serv-
ice of this State and Illinois upon the lower Wabash ; but as
he has but very recently left the field of active operations in a
survey between the Grand Rapids and the mouth of that river,
including the adjacent country, it has been out of his power to
prepare and furnish it by this time.9 In anticipation of that docu-
ment, they feel at liberty to state, that the navigation of that part
of the Wabash will prove to be much better than heretofore
supposed.
8 Jesse L. Williams.
9 David Burr was the principal engineer on the Wabash River. His
report, addressed to Thomas H. Blake and M. K. Alexander, commis-
sioners of the states of Indiana and Illinois, was transmitted to the
House on January 25, 1839. It is printed in the Documentary Journal,
1838-39, No. 27.
Report of Internal Improvement Board, December 20, 1838 237
As soon as it is practicable to make it out, the General Assem-
bly will be furnished with a report in detail, relative to the sales
of canal lands, and of the accounts of the members of the Board
separately, distinguishing their disbursements under proper heads.
The special calls made shall also be faithfully attended to.10
The Board cannot close this report without adverting to the
necessity of permanent legislative provision for the liquidation of
interest accruing upon our state bonds. The data upon which
was predicated the report of the Board of January 7th, 1837,
having been varied by subsequent legislation in disposing of the
surplus revenue for other purposes, it would give great advantage
to the fund commissioners, in their negotiations for the sale of
bonds, to be able to point to the means provided by the State to
redeem her obligations.
By what process a sinking fund for this purpose is to be pro-
vided, is, of course, with the General Assembly; but the necessity
for the adoption of some plan at this time, is urged upon their
consideration.11
Respectfully submitted,
D. H. Maxwell
John Woodburn,
Samuel Lewis,
J. B. Johnson,
John A. Graham,
Elisha Long,
John G. Clendenin,
A. F. Morrison,
Thos. H. Blake.
Indianapolis, 20th December, 1838.
10 The Documentary Journal, 1838-39, No. 23, gives the receipts and
expenditures of the Wabash and Erie Canal and other internal improve-
ment funds; ibid., No. 32, is a statement of the accounts of the various
members of the Board of Internal Improvement, including their receipts
and disbursements.
11 The general revenue bill passed at this session provided for a levy
of 30 cents on each $100 of taxable property for the year 1S39, most of
it to be used for interest payments. Laws of Indiana, 1838-39 (general),
pp. 27-28. It was estimated that this levy would produce about $300,000.
Indianapolis Indiana Journal, March 9, 1839.
238 Wallace Papers
Fund Commissioners : Replies to Senate Resolutions1
Office of Fund Commissioners,
Indianapolis, 21st Dec. 1838.
Hon. David Hillis, President of the Senate:
Please lay the enclosed reports before the body over which you
preside, and oblige your ob't serv'ts,
Caleb B. Smith, ) „ , „ ,
T _, > rund Com rs.
James Harrington, \
The Fund Commissioners of the State of Indiana, in compliance
with a resolution of the Senate, requesting them to report
whether in their judgment the interest of the State would require
that in making further loans, an agent should be despatched to
Europe to make sale of the State Bonds, and also a comparative
statement of the advantages of selling the State Bonds in eastern
cities of the United States and in the European market, report:
That from the information they have been enabled to obtain
. . . they are not aware that any decided advantage would accrue
to the State by sending an agent to Europe to sell her bonds.
. . . The principal bankers in Europe have their agents in this
country, by whom they are advised and guided in their opera-
tions in American securities, and through these agents their
purchases are generally made. The difference in the price of the
stock whether sold in the eastern cities or in Europe is the rate
of exchange between the two countries at the time of the contract
and the usual commission charged on sales. The general average
of exchange may be considered as 9 per cent. ; the commission or
profit from a half to one per cent. If the sale is abroad, the
exchange is off; if in this country, the exchange is added to the
price in the foreign market. . . .
Those states that have borrowed the most extensively, and
whose credit is among the first, have generally made their loans
in this country; and the result that has attended the negotiations
of states that have made sales through their agents in Europe,
have been understood to be on terms less favorable than if made
in this country.
i Senate Journal, 1838-39, pp. 306-10.
Fund Commissioners to the Senate, December 21 , 1838 239
The Board, in the present year's loans, have executed 1,000,000
dollars of sterling bonds, the principal and interest payable in
London, as they are more sought for, and a readier sale in the
foreign market, and when introduced, it is believed they will
eventually command a better price than the dollar bonds. The
difference between the bonds in sterling and the dollar bonds
is about 9 per cent. The exchange and commission on the inter-
est payments in London will make the value of the present million
sterling equal to the dollar bonds sold in this country at 90.
In the sale of sterling bonds in this country, we get the differ-
ence of exchange, which will have to be repaid on the final pay-
ment of the loan.
The Board have thus far avoided the making of 6 per cent,
bonds, which they are authorized to do, and the sales of the 5s are
yet on more favorable terms than 6 per cents at par, the difference
between the present value of 5 and 6 per cent, stocks, having 25
years to run, is about 14}^ per cent. A sale of 5 per cent, stocks
in this country at 85^2, is equal to a sale of 6 per cents at par.
Respectfully submitted,
Caleb B. Smith,
Fund Com'rs.
James Harrington,
The Board of Fund Commissioners in compliance with a reso-
lution of the Senate . . . present . . . the following statement of
the amount of State Bonds sold on account of the Wabash and
Erie Canal Fund, and the Internal Improvement Fund, with the
amount of premium received upon the respective sales.2 [See tables
on pages 240-41.]
The whole amount of bonds sold on account of the Wabash
and Erie Canal Fund as appears from the . . . [first table], is
one million three hundred and twenty-seven thousand dollars, and
2 In a similar report sent to two members of the ways and means
committee of the House, the Fund Commissioners added a list of the
bonds sold on account of the State Bank, amounting to $1,390,000, on
which the amount of premium was $29,900; and bonds sold for the
Lawrenceburgh and Indianapolis Railroad Company amounting to $221,-
000. The grand total of all bond sales, after deducting premiums, was
$7,238,000. House Journal, 1838-39, p. 402.
240
Wallace Papers
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242 Wallace Papers
the amount of premium received, is forty-four thousand five hun-
dred and sixty dollars.3
The funds received upon the sale of state bonds have been
deposited in New York, principally with the Morris Canal and
Banking Company, and the Merchants' Bank, they allowing the
State 5 per cent, interest until the money was drawn.
The disbursements upon the several works have been made
by the branches of the State Bank, most convenient thereto, and
for the amount paid by them, the fund commissioners have,
during the past year, given their drafts upon the funds of the
State in New York, payable sixty days from the expiration of
the months in which the payments were made. By this arrange-
ment the funds of the State have been left on deposite an average
of seventy-five days after payment made to contractors, and the
State has received the interest during that period while the
banks have had the benefit of the exchange as a compensation for
the trouble and expense of disbursing and the loss of the use of
it for seventy-five days.
The interest to be paid during the next year upon the bonds
now sold with the commission, and exchange for the payment
of interest upon sterling bonds will be $287,169 25.
The Board of Fund Commissioners have been authorized by
the Board of Internal Improvement to sell one million of bonds
in addition to those now sold. Should these be sold, the interest
to be paid next year, with commission and exchange, will be
$341,769 25.
Respectfully submitted,
Caleb B. Smith, )
T t-. > Fund Com rs.
James Harrington, \
3 The Fund Commissioners reported on February 12, 1839, that they
had effected a further sale of $800,000 sterling bonds, and $400,000 of
dollar bonds for the canal to the Morris Canal and Banking Company on
the same terms as the last loans. The time of payment was graduated so
as to meet the probable requisitions on the public works. Senate Journal,
1838-39, p. 673.
Whitcomb to Wallace, December 27, 1838 243
Commissioner of the General Land Office to Wallace1
27 December 1838
Sir, Your letter of the 15 September last, to the Secretary of
the Treasury, has been referred to this office, accompanied by
lists No. 1 & 2 of certain selections made by you by virtue of
the right claimed by the State of Indiana under the act of
Congress approved 2 March 1827 to make further selections
of land to aid in the extension of the Wabash and Erie Canal
to Terre Haute.2
The following question among others relative to the claim of
Indiana was propounded to Attorney General Butler viz
"Has the State by the Governor or other authorised agent a
right to make the selection in the first instance, and report such
selection to the Secretary of the Treasury or other officer for
subsequent confirmation or recognition?" to which he replied in
the negative. . . .
In consideration of the different opinions entertained as to the
right of the state to make additional selections of land for the
object mentioned, the Secretary of the Treasury concluded to
recommend that the whole matter be presented to Congress with
a view of obtaining a declaratory act on the subject. For your
information I have the honor to enclose herewith a copy marked
B of the Secretary's letter of the 18 Inst indicating the course
which it was deemed proper to pursue in this case3, and beg leave
to add that pursuant to his recommendation the subject has been
submitted to Congress by the President as the late Attorney
General was of opinion that the right to make additional selec-
tions is not vested in the state by the act of 1827 and as the
whole matter, as stated, has been referred to Congress in order
to obtain further legislation thereon, it will be seen that this
office is necessarily precluded from recognising the selections that
1 General Land Office, Miscellaneous Letters Sent, Vol. 10, p. 153.
2 See above, July 26, 1838, for an earlier letter of Whitcomb on the
same subject; also Wallace's reference to the matter in his message,
171-77n. Wallace's letter to Whitcomb has not been found.
3 The letter is printed in House Executive Documents, 25 Congress,
3 session, Vol. 3: No. 32, p. 3.
244 Wallace Papers
you have made or admitting your right under existing laws to
make such selections.
When the papers that have been sent to Congress in relation
to this claim shall be printed, it will afford me pleasure to avail
myself of an early opportunity of transmitting you a copy
With great respect I am Your Obt Sevt
Jas Whitcomb Commissioner
Wallace: Reply to Senate Resolution1
Executive Department,
Indianapolis, Dec. 28, 1838.
Hon. David Hillis, President of the Senate:
Sir: — In compliance with the request of the Senate, contained
in their resolution of 10th December, I herewith transmit to
them through you, the correspondence and documents in my
possession received from the Governor of Michigan in relation
to the improvements of the St. Joseph river.2
Also in reference to the documents and correspondence called
for by the resolutions of the Senate of the 15th and 18th Decem-
ber, "relative to the removal of the Pottawatamies from our
state, the calling out of troops, &c;"3 and "to the selection of
lands under the act of the 2d March, 1827, for the purpose of
constructing a canal from the navigable waters of the Wabash
river to the navigable waters of Lake Erie."4 I have to reply
that they are all in the possession of the House of Representa-
tives; having been left there with the message.
David Wallace
1 Senate Journal, 1838-39, p. 318.
2 This correspondence was not printed in the Senate Journal and no
copy has been found.
3 Printed in Senate Journal, 1838-39, pp. 716ff.
4 See above, 144-46, 171-77n, and House Executive Documents, 25
Congress, 3 session, Vol. 3, No. 32.
Election of United States Senator, January 11, 1839 245
Certification of Election of United States Senator1
[January 11, 1839]
To His Excellency the Governor of the State
of Indiana
General Assembly of the State of Indiana — set
We the undersigned David Hillis President of the Senate, and
Thomas J Evans Speaker of the House of Representatives do
hereby certify that on the 12th day of December A. D. 1838
Albert S White was by joint vote of the two Houses of the said
General Assembly according to law duely elected senator of
the U S Congress for the State of Indiana for six years from
and after the third of March next to supply the place of the
Hon John Tipton whose term of service will expire on the day
last aforesaid. In testimony whereof we have hereunto set our
hands, and seals this 11th Day of January 1839 — 2
David Hillis
President of the Senate
Th J Evans
Speaker of the House of Reps
1 Election Returns, Archives Division, Indiana State Library.
2 Although the Whigs were in a majority in both houses of the
General Assembly, they were unable to unite on a candidate for the
Senate seat about to be vacated by John Tipton. Noah Noble and
Thomas H. Blake were the two leading Whig candidates; Ratliff Boon,
Tilghman A. Howard, and Charles Dewey were the leading Democrats
seeking the post. It proved to be the bitterest battle yet waged in the
General Assembly for the election of a United States Senator. Albert
S. White was brought forward as a compromise candidate on the thirty-
second ballot and elected on the thirty-sixth ballot. White had been
elected as a Whig to Congress in 1837, but the Indiana Democrat con-
sidered his course as "courteous to the administration" and therefore
acceptable to the Democrats who joined with some of the Whigs to elect
him. Indiana Election Returns, 1816-1851, 132-33; Indianapolis Indiana
Democrat, December 15, 1838.
Following the election at least two legislators tried to prevent a recur-
rence of such a stalemate by recommending that the law be changed to
permit voting by ballot rather than viva voce, but no change was made.
Indianapolis Indiana Journal, December 22, 31, 1838; Senate Journal,
1838-39, p. 141.
246 Wallace Papers
Select Committee of the House : Report on
State Revenue1
[January 14, 1839]
The select committee to whom was referred a resolution of the
House, instructing them to inquire into the causes of the diminu-
tion of the revenue in several counties of the State, and also to
suggest a remedy for the evil, have had the same under considera-
tion, and would respectively submit the following report :
That a great inequality does exist in the assessment value of
land in the State, there can be no doubt. A glance at the
Auditor's report will satisfy the most incredulous on this subject.
In many counties in the State land has depreciated in value
beyond any former example, or else the assessors, have not done
their duty; and when it is known that those counties in which
the greatest depression in the price of land has occurred are
internal improvement counties, and have had millions expended
within their limits, and blessed with the richest soil in the State,
your committee cannot avoid expressing their fears that there
has been a wanton direlection of duty on the part of the officer
charged with the assessment. In 1836, the internal improvement
law was passed ; it was argued by the friends of the system, that
in consequence of the location of the public works, lands in their
vicinity would be greatly enhanced in value. The proximity of
land to a rail road or a canal, would be the criterion of its value.
It was maintained that the counties most benefited by the system
of internal improvement would pay the most revenue into the
treasury, and the counties not benefited would pay the customary
tax. Consequently no injustice on the score of taxation would be
done to any portion of the State. This rational inference, drawn
from the reasoning of the friends of the system, had the effect to
reconcile to some extent the dissatisfied counties in the State to
the policy.
The argument however has proved to be fallacious, and the
hope based upon it a delusion. In many counties where a great
increase of revenue was anticipated, there has been an annual
1 House Journal, 1838-39, pp. 268-70.
Report of House Committee, January 14, 1839 247
falling off since the year '36. In many of the accommodated
counties there have been vast accessions to the taxable lists, not-
withstanding, the revenue continues to diminish. — By reference
to the report of the Auditor of State, it will be seen that in 1837,
the aggregate amount of land in the state, subject to taxation for
that year, was a fraction over 6,000,000 of acres, the value of
which was estimated at $61,000,000. In 1838, 1,000,000 of acres
was added to the tax list of taxable lands throughout the state,
nevertheless, the aggregate value of the whole was estimated at
$60,000,000. An increase of taxable lands to the amount of a
million of acres, and yet a decline in the value of the whole of
one million of dollarslll It does seem to your committee, that
in the counties in which millions of dollars have been expended,
and where every article of produce has commanded a high price,
and where the soil is equal in fertility to any in the world, land
should have maintained its value. The expenditure of money
within their limits and the great demand for the products of the
farm created by the importation of swarms of laborers, should,
it would seem to your committee, have operated favorably upon
the price of land for the time being; but your committee regret to
say, that instead of these salutary results from the system of im-
provement upon the value of land in the vicinity of the works,
the reverse has happened. ... In proof of this assertion the
following facts are submitted.
In the county of Floyd, which has the largest commercial town
in the state, distinguished for its enterprise, and active capital, the
terminus of two important public works, where thousands of
dollars have been scattered among the community, and where
there has been an increase in the quantum of taxable lands, there
has been a falling off in the revenue of $267.00! Notwithstand-
ing the expenditure in Jefferson of near a million of dollars, that
county has increased in revenue only $42, while the county of
Scott, not touched by an improvement, has increased $14. The
county of Tippecanoe with an addition to her list of taxable lands
of forty thousand acres, has decreased in revenue $300, while
Jackson, a county as remote from the public works as any in the
state, has increased $445. The county of Fayette, an internal
248 Wallace Papers
improvement county, has decreased $719, while Clark has in-
creased $640. The county of Dearborn has decreased $767, while
Switzerland has increased $215. Vanderburgh county, in which
the Central canal terminates, has decreased $250, while Perry,
with a poor soil and wholly neglected, has increased $107. The
county of Carroll, through which the Wabash and Erie canal
passes, with an accession of 226,000 acres of land to her tax list,
has returned to the treasury only $147 more this year than last!
Your committee might go on multiplying examples of this kind,
all tending to prove the inequality complained of, but further
facts are deemed useless. That there is something wrong in the
mode of assessing or in the practical operation of the internal
improvement system, there cannot be a doubt. So great a
transition in so short a time, may well give rise to dissatisfaction.
Your committee will not indulge in the expression of their feel-
ings and opinions in reference to a supposed cause for the de-
linquency. They regret that there should be the slightest cause
for suspicion of injustice or collusion in assessing the revenue in
any county of the state, but a sense of duty compels them to say,
that the impression that the prominent friends of the present sys-
tem of internal improvement, have exercised an influence in some
counties of the state so as to prevent a fair and just assessment
of lands with a view to guard against oppressive taxation, and
thereby keep the people of those counties reconciled to the system,
is not without grounds to support it.
In conclusion, your committee would recommend the adoption
of the following resolution:
Resolved, That the committee of ways and means be instructed
to inquire into the expediency of organizing by law a state board
of assessors, or district boards, with such authority and powers
as will enable said board to equalize taxation in the several
counties in this state, according to the true intent and meaning
of the ad valorem system of taxation ; with leave to report by
bill or otherwise.2
[Nathaniel J. Fields]
2 The ways and means committee reported a bill to provide for the
appointment of a state board of equalization but it was tabled on second
reading. House Journal, 1838-39, pp. 470, 525.
Report of Ways and Means Committee, January 24, 1839 249
Ways and Means Committee of the House :
Majority Report on Fiscal Matters1
[January 24, 1839]
A majority of the committee of Ways and Means, whose duty
it is to examine the offices of Treasurer and Auditor of State,
the condition of the Treasury, and generally all things connected
with the administration of the fiscal concerns of the State, submit
the following Report:
That the committee have examined the books, papers, vouchers,
warrants, and cash on hand in the offices of Treasurer and Audi-
tor, and find the same correct. The books are neatly kept, and
the various duties of both offices are, in the opinion of your com-
mittee, faithfully and diligently performed.
The following tables and abstracts present a detailed view of
the present condition of the public finances, together with an
estimate of their prospective operation.
Abstract No. 1, contains a statement of the assessments, collec-
tions, and payments into the Treasury for the year 1838, by
which it will be seen that the nett amount of revenue for that
year was $172,447 21, and that the amount paid into the Treas-
ury up to the close of the year was $160,263 87.
Statement No. 2, exhibits the receipts and expenditures for
the year 1838, by which it will be seen, that the balance remain-
ing in the Treasury on the 1st day of January, 1839, was
$166,982 12.
Statement No. 3, exhibits a list of balances due the State from
collectors of former years.
Statement No. 4, shews the available means of the Treasury
for the current year, 1839, and an estimate of the expenditures
for the same period, by which it will be seen, that after defraying
the expenses of the year, there will remain in the Treasury
$35,276 37. This amount, if no appropriations be made, other
than are now provided by law, may be safely set apart towards
l House Journal, 1838-39, pp. 367-69; Documentary Journal, 1838-39,
No. 28. The statistical tables accompanying the report are given in the
House Journal and Documentary Journal but have not been included
here.
250 Wallace Papers
discharging interest on improvement loans, and which the com-
mittee recommended be so disposed of; the more particular
manner of which the committee will hereinafter suggest.
The magnitude of the system of improvements, undertaken by
the State, imposes upon the General Assembly, the obligation of
providing undoubted means for the discharge of every public en-
gagement, and in such manner as to insure confidence in our
ability and readiness to fulfil with certainty and promptitude,
every just expectation predicated upon the high credit which the
State has hitherto sustained.
To carry out this, it will be indispensable to make some perma-
nent legislative provision for the future regular payment of
interest on the public debts.
While the committee have undoubted confidence in the means
and resources of the State, and of the willingness of the people
to contribute in aid of the great work in which the State has
embarked, nevertheless it is requisite, that, when necessary to
draw upon the resources, by taxation, the burthens should be
equitably and equally imposed, and limited in their extent, to
the lowest possible amount required to discharge the best obliga-
tions of the State.
After surveying the whole ground, and consultation and advice
with public officers and others conversant with the public finances,
the committee have arrived at the conclusion that the revenue
system at this time most advisable, is presented in the following
outlines of the revenue bill which the committee will report to
the House, and the passage of which they recommend.2
For the Ordinary Expenses of the State
1st. A poll tax of $1 on each poll.
2nd. A tax of $5 on professions, to wit: $5 on each practising
lawyer and physician.
3d. A tax on public officers, viz: $10 each on members and
officers of the General Assembly, Treasurer, Auditor, and Secre-
tary of State, and public Printers, and of $5 each on Clerks of
the circuit court, Recorders, and Sheriffs.
2 None of the recommendations set forth by the committee became law.
A bill taxing professions was introduced but received no further consid-
eration. House Journal, 1838-39, p. 470.
Report of Ways and Means Committee, January 24, 1839 25 1
A Statement No. 5, is herewith appended, exhibiting the results
of receipts and expenditures of the State for 1840, based upon
this proposition, by which it will be seen that the assessment for
1839 will produce an adequate amount to meet the disbursements
of 1840.
For providing means to pay interest on Improvement Loans
By a property tax of 30 cents on each $100 of valuation of
taxable property, for the years 1839, 1840, and 1841; and a levy
of 25 cents on each $100 for the years 1842, 1843, and 1844, and
a levy of 20 cents on the $100 for each of the years 1845, 1846,
1847, 1848, and 1849, an amount may be realized sufficient, (with
other means enumerated in the report of the Principal Engineer)
to discharge the entire amount of interest on the improvement
loans down to the year 1850.
In arranging the tax to be levied for a series of years, and
reducing the amount at intervals, it necessarily occurs, that in
some years there will be a deficit, and in others an excess. The
principal deficits will occur in the first two years, after which
there will be an excess for the next succeeding four years. The
deficit of 1840, however, will be readily met by the surplus which
will remain in the treasury at the close of 1839. As the deficits
and excesses of the remaining years alternate, it is presumed that
no inconvenience will arise. . . .
Although objections may be made to the mode proposed for
raising revenue to defray the ordinary expenses of the State, yet
the committee cannot believe that any serious opposition will be
made to the proposition, when the fact is obvious, that a poll
tax of $1 is low in proportion to the property tax, and that those
who pay on property, also pay a poll tax the same as those not
paying property tax.
The benefits of the government and the administration of the
laws, are alike a protection and a blessing to all; and surely no
citizen enjoying these, will object to pay the small sum of $1
annually for the support of the government.
The propriety of taxing officers and professions, the committee
think, cannot be doubted, as the possession of the one, and the
252 Wallace Papers
acquirements usual in the other, are equal in their profits and
advantages, to an amount of (other) capital sufficient at least to
charge them under our revenue laws, with a tax equal to that
now proposed.
As the proper officers have made the necessary arrangements
for the interest on the public debt for 1839, the committee have
omitted that year in their estimates.3
In accordance with these suggestions and recommendations, the
committee will report A bill prescribing the mode of levying the
taxes; A bill presenting the duties of county treasurer, by which
the treasurer is made the collector, and the fees for collection
reduced ; A bill prescribing the duties of county auditor, and
providing for his appointment; A bill providing for the redemp-
tion and final disposition of lands sold for taxes.4
R. J. Hubbard, Chairman
3 The minority report of the ways and means committee, signed by
Samuel Judah, G.P.R. Wilson, W. Parker, and A. M. Puett, stated they
had no reason to believe that any arrangements had been made for the
payment of the interest. In addition, they pointed out that the taxes
proposed by the majority were not equitably and equally imposed on
the taxpayers. In their opinion, taxes for internal improvements should
be assessed on the counties and townships in the proportion that each
was expected to benefit from such improvements. They favored an
increase in the capital of the State Bank and the formation of an internal
improvement sinking fund to which could be appropriated such items
as: money due from canal lands, tolls and rents for water power, inter-
est on first and second installments of surplus revenue fund as soon as
present commitment should expire, the whole Cohen compromise prop-
erty, all profits on future state investments in bank stock, and the origi-
nal and as yet unappropriated capital in the twelve branches amount-
ing to $960,000. The report is in the House Journal, 1838-39, pp. 397-99,
and in Documentary Journal, 1838-39, No. 29. See also Samuel Judah
to Noah Noble, November 6, 1839, below.
4 On the day this report was made the committee introduced three
bills: to provide for the appointment of county assessors, to prescribe the
duties of county auditors, and to prescribe the duties of county treasurers.
No further action was taken on these. House Journal, 1838-39, p. 383.
On February 1, the committee presented its bill "pointing out the mode
of collecting taxes, and the per centum for state purposes," which was
passed. It provided for a poll tax of 50 cents and 30 cents on each $100
valuation of taxable property, the latter to be used for internal improve-
ment purposes. Laivs of Indiana, 1838-39 (general), pp. 19-28.
Judah to Wallace, February 9, 1839 253
Samuel Judah to Wallace1
The undersigned respectfully recommends Mr. Cox case and
his own precisely like it to the attention and favour of Gov'r
Wallace.
Feb'y 9, 1839 Sam'l Judah
[Enclosure]
January 27th 1839
Dear Sir
From various causes Which is unnecessary to detail, I have
defered writing to you untill this late hour. I Wishe you to Inter-
cede with his Exclency the Govenor on my behalf respecting my
treating a few friends previous to the late August Election and
I will do as much for you when opportunity offers.2
I have been in verry bad health and have not examined the
proceedings of the Legislature. I was much pleased with message
of the Govenor with the exception of an Item or two I[f] your
Bill to reduce the board of Inturnal Improvement will pass I
also think the Capital of our state Bank ought to be increased
Yours truely
Jonathan P Cox
Samuel Judah
1 Secretary of State file, Archives Division, Indiana State Library.
2 Cox and Judah had been opposing candidates in the August, 1838,
election to represent Knox County in the House of Representatives.
Judah was elected. The Knox County Grand Jury at its September
term, 1838, presented evidence to show that Judah had treated the voters
with wine, brandy, gin, rum, and whisky at the various polling places
in the county. Transcript of Proceedings in Knox County Circuit Court,
in Secretary of State file, Archives Division. Another request for par-
dons for the two men, signed by George Boon, John Reily, A. Kinney,
J. T. Moffatt, and others, bears the endorsement of Governor Wallace
that a pardon was issued to each of the men on February 12, 1839.
Pardons and Remission of Fines, Archives Division, Indiana State
Library.
In a letter to the voters following the election, Judah claimed that
Samuel Merrill, president of the State Bank, and the officials of the
Vincennes Branch, had used their influence to try to defeat him for his
course against the bank at the last session of the legislature. Vincennes
Western Sun & General Advertiser, August 11, 1838. Judah was chair-
man of the special committee that investigated the bank. Their report
is printed in House Journal, 1837-38, pp. 390-510.
254 Wallace Papers
Wallace: Nominations for Fund Commissioner1
Executive Department,
February 14, 1839.
Hon David Hillis, President of the Senate:
Sir — I nominate for the confirmation of the Senate, James
Farrington of Vigo county, Milton Stapp of Jefferson county, to
serve as fund commissioners, for the term of three years from the
first day of March next agreeably to the act of the General
Assembly of the state of Indiana; approved February 14, 1839. 2
David Wallace
Milton Stapp to Noah Noble1
City of Newyork April 20th 1839
Noah Noble Esq President B. I. I.
Sir, I, on this day closed a contract with the Morris Canal &
Bkg Co. for $400,000 for our works of Internal improvement,
$200,000 sterling bonds 5 per ct at 98 cts to the dollar & $200,000
5 per cent dollar bonds at 88 cts. This is something better than
i Senate Journal, 1838-39, p. 687.
2 The act referred to abolished the board of Fund Commissioners
as then constituted and provided for the appointment by the Governor
with the consent of the Senate of a new board of two commissioners,
who would hold office for three years. The duties of the former board
were transferred to the new one, including the negotiating of such loans
as they deemed conducive to the interest of the state. Laws of Indiana,
1838-39 (general), 29-30. The nomination of Farrington was confirmed
by the Senate on February 1+ by a vote of 39 to three, that of Stapp
by 35 to seven. Senate Journal, 1838-39, pp. 687-8S. The Fund Com-
missioners replaced by the new law were Isaac Coe, Caleb B. Smith,
and James Farrington, the last being appointed to the new board.
Farrington had received an interim appointment from Governor Wallace
on April 23, 1838, vice Samuel Hanna. He resigned almost immediately
after the Senate confirmation and Demas Deming was appointed in his
place on March 23. He did not accept, and Lucius H. Scott was appointed
on April 8. Indianapolis Indiana Journal, February 15, March 23, April
20, 1839; Record of Executive Commissions, 1837-1845, in Archives Divi-
sion.
The fact that the Fund Commissioners were required to give bond for
$100,000, conditioned on the "faithful and correct discharge" of their
duties, may have been a deterrent against acceptance of the position.
1 Noah Noble Papers, Indiana State Library.
Stapp to Noble, April 26, 1839 255
6 per ct bonds at par, and the best that can be done with our
bonds at present. The Ohio 6 per cent bonds were put in market
by advertisement on the 18th and it is understood that no offer
whatever was made for them. This sum of $400,000 is absolutely
necessary at this time to cary on our works and save the credit of
the state, a portion of it is payable 1st May and 1st June so as
to meet, and supply failures from other sources. You can now
put the rail road under contract with safety.2 We want about
$300,000 more for our works during the financial year to 1st
March next which I hope we can obtain in time on better terms
Very respectfully Your obt St
Milton Stapp
Milton Stapp to Noah Noble1
City of Newyork April 26th 1839
Dear Sir ... I will refer you to my letter to Gov Wallace2
as to the particulars of the $400,000 loan I made on my own
responsibility, having no associate. Mr. Merril has made a loan
for the Bank, $1,000,000. My opinion was that he ought not to
go higher than 6 or 800,000 at furthest, and I believe Merril
thought with me, but Doctor Coe was anxious for him to take
the 1,500,000, — so was Farington & James M Ray & others.
I think Merril was governed too much by their opinion but it
may be for the best There are many stocks in market, from all
parts of the United States. I think if stocks rise again you had
better authorise the loaning of a million ahead so as to take
advantage of the situation of stocks. We want 5 or 600,000 more
for our operations to the 4th of March but we will wait a while
for better terms. I think I will be at home by the 1st of June or
before
Very respectfully Your obt st.
Milton Stapp
[Addressed:] Noah Noble Esqr Indianapolis Indiana
2 The reference is to the Madison and Indianapolis Railroad.
1 Noah Noble Papers, Indiana State Library.
2 Not found.
256 Wallace Papers
Samuel W. Harlan to Secretary of State1
State of Indiana ) Q
Delaware County C
I Saml W Harlan Clerk of the Delaware Circuit Court do
certify that Joseph Thomas has resigned the office of sheriff of
the County of Delaware and State of Indiana which resignation
is to take effect on the fourth day of June next.
Witness Saml W Harlan Clerk of the Delaware Circuit Court
& its seal May 30, 1839
Saml W Harlan Clk DCC
Muncietown May 30th 1839
Sir, Enclosed you have a certificate of the resignation of Joseph
Thomas Sheriff of our county which is to take effect on tuesday
next, the reason the resignation does not take effect amediately
is that an individual is now confined in our jail on a charge of
Larceny and if the sheriff goes out of office amediately there will
be no person to take charge of him the sheriff has tried to pro-
cure a jailor but cant do so. An other reason is that there is
business of importance to be done and the coroner is not in my
opinion capable to discharge the duties and that he the coroner
a fiew days since brough me his books and requested that I should
write his resignation but knowing that his time expired in August
next and no business for him to do I neglected to do so but since
the sheriff is about to resign he has come and demanded his books
and is determined to have the business of sheriff.2 James O Leas
is an applicant for the appointment until august, and from my
acquaintance with him I think he would make a good sheriff,
and I have no doubt but general satisfaction will be given if he
is appointed he will present you with a recommendation with the
principal part of the citizens of the town to it, moast of whom
1 Secretary of State file, Archives Division, Indiana State Library.
2 George Cummerford was the coroner; he had been elected in 1837
and was re-elected in 1839. Record of Executive Commissions, 1837-
1845, in Archives Division.
Coe to Noble, June 11, 1839 257
you are acquainted with, and as far as I have heard the matter
spoken of the people are anxious for his appointment
Yours &c
Saml W Harlan
Wm J Brown Esqr
[Addressed:] To Secretary of State Indianapolis Indiana
[Endorsed:] James O. Leas is appointed sheriff of Delaware
County vice Joseph Thomas resigned June 1st 1839 —
D Wallace
Isaac Coe to Noah Noble1
N. Y. June 11 1839
N. Noble Esq Comr
Dr Sir Mr Scott2 having this morning left to meet his family
at Phila desired me to reply to yr fav[or] of 31st ult. reed as he
was about to start.
With respect to the Lawrenceburgh draft of $20,000 not paid
it and $23,000 more was not only drawn without authority from
the Comrs but after I had expressly forbidden the cashier to
draw until he reed authority from the new Board. The $23,000
was however paid and he was authorized to draw for all the
balance due the Bank the 1st July.
Since that time he has written to Mr Scott that he cannot
make the June payment unless he is assured It will be paid
here the 1st August which is a month earlier than due by con-
tract. The Deer & January payments were more by exceeding
$200,000 than in any previous years and there has been a dis-
appointment in the present [ ?] payment of upwards of $300,000
due from New Banks & companies to which sales were made last
summer at par for 5% dollar bonds — & both these together with
the payment of $194,000 the 1st July has rendered the Comrs un-
able to make the payments punctually to the branches and may
render a further curtailment of expenditures necessary as our
1 Noah Noble Papers, Indiana State Library.
2 Lucius H. Scott, who had been appointed a Fund Commissioner in
April. Coe was formerly one of the commissioners.
258 Wallace Papers
state stocks cannot now be sold at the limits [ ?] prescribed by
law. It is hoped the greater part or all due from New Branches
will be pd. during the season, still the amt of interest due 1
Jany upwards of $200,000 which must be paid will render it
very uncertain whether the comrs can be able to pay in all more
than from 900,000 to a million dollars for expenditures since 1
March in addition to the $400,000 interest therefore it will be
advisable as much as practicable to curtail expenditures, probably
it may be better not to make the payt on the Whitewater
Canal if it can be put off until the 1st July, as if paid any time
during the month it becomes due at the same time as if made
the first and possibly by the 1st July the Comrs may put some
funds in the hands of the bank to pay out for them. The interest
& amt which will be paid the Branches the 1st July is over
400,000 & the Comrs are doing all they can to make the
payments —
Very respectfully Yrs
Isaac Coe
A. Moderwell to Wallace1
Madison July 1, 1839
His Exelency Gov Wallas thare was an Election held in
Madison Township last Satarday for justice of the peace the
highes returned is A Sullivan who has not been a resident of
Jefferson County the last 12 months I refer you to the 10 artical
of the Constitution as no Doubt his Election will be Contested2
Respectfully yours &c
A Moderwell
[Addressed:] His Exelency Gov. Wallas Indianapliss
1 Election Returns, Archives Division, Indiana State Library.
- The reference may be to Aaron Sullivan. He was not commissioned
justice of the peace.
Scott to Noble, July 5, 1839 259
Lucius H. Scott to Noah Noble1
New York 5th July 1839
Dear Sir I have this morning reed, jour favors of the 27 &
28th Ult. and will pay both your Drafts on presentation. Your
letter gave me the first intelligence of the determination of the
Branch at N. Albany. I think under all the circumstances their
course is somewhat illiberal, as it certainly has been very unex-
pected— There is no Branch in the state for whose accommodation
I have made the same efforts, & none that has so little reason to
complain, but I suppose they have use for all their means & we
must try to get along without them.
I have written the Vincennes Branch & have no doubt but they
will make the necessary payment until some definite arrangement
can be made.
It gives me pleasure to inform you that I have this morning
closed a negotiation for a new loan of 600,000 dollars.'- The
payments are not as prompt as we could wish, yet, under the
circumstances of the times, and as much so as we could expect,
& will enable us, with little indulgence on the part of the Banks,
to get along with this seasons operations without further difficulty
— You judge right in supposing that I have not been reclining
upon a "bed of Roses." In making this new loan I have agreed
to receive a part of it in the currency of the Banks here, or
Western Banks in good credit, say Ohio or Illinois, & have
pledged my own word & the honor of the state that it shall be put
in circulation in good faith among the Branches, & I need not say
that the credit of the state and its institutions require that this
pledge shall be faithfully redeemed — I ask in this matter the
influence & co-operation of your Board. . . .
Very Truly Yr frd. & obt. Servt.
L. H. Scott
His Esq. Noah Noble Indianapolis
1 Noah Noble Papers, Indiana State Library.
- The Indianapolis Indiana Journal, July 27, 1839, reported that the
loan had been made on favorable terms. It brought to $1,000,000 the
amount borrowed for internal improvement purposes in 1839.
260 Wallace Papers
Milton Stapp to Noah Noble1
City of Newyork Augt 6th 1839
Dear Sir I have just been notified by the Moris Canal and
Bkg Co that they can pay us no more money on their contracts.
If they adhere to this resolution & our Banks refuse to pay, our
works must stop.2 I think we ought to make an effort to continue
the works but it ought to be done slowly. I dread an entire
stoppage. Mr. Scott is in Philadelphia I have written for him to
return that we may consult as to the best course to be pursued.
In the mean time it might be best for your board to get together
and by the time you do this you will have more information from
us. this state of things cannot last long unless the farmers are
pursuaded to hold on to their produce for higher prices they
had better sell for what they can get now they will not do
better by holding on If their produce comes freely into market
we will be able to go on again in 90 or 120 days. Lanier writes
me that he cannot pay longer I think the Banks at Madison
and Indianapolis ought to keep the Madison road going they
cannot risk much in doing so please see the officers on this subject
and try to get them to pay $100,000 to keep it going Very re-
spectfully
Milton Stapp
[Addressed:] Noah Noble Esq Prest Board I. I. Indianapolis
Indiana
1 Noah Noble Papers, Indiana State Library.
2 The news of the defalcation of the Morris Canal and Banking
Company was not unexpected. Calvin Fletcher recorded in his Diary on
July 9 that he and Noble had "speculated" on the possibility that "in
the midst of our works we should be stopped short for [want of]
means." Fletcher suggested that if this should happen, the state should
call for volunteers to finish the improvements begun rather than abandon
them. On the 30th of July Fletcher remarked that money was very
scarce; practically no business was being carried on in Indianapolis.
On August 10 he wrote, "the tidings we have for sometime feared has
reached us the Morris Canal Co N Y which has taken our state bonds
in advance for nearly 2 million have faild, suspended payt — our system
of internal impt our merchants & traders, contractors, &c concerned with
the canal must break God only knows the consequences."
This same company had also taken one million dollars in bonds
Ewing to Pf'allace, August 13, 1839 261
Charles W. Ewing to Wallace1
Fort Wayne Aug. 13th 1839
His Excellency Gov'r Wallace
Dr Sir
For a twelve month past I have entertained the determination
of not being a candidate for the office of President Judge of the
8th Judicial Circuit next winter but was resolved untill the last
twenty four to serve out my term of office. My reason for the
former determination, is, the total inadequacy of the salary to
afford to a resident of this place a decent support even with the
exercise, of the strictest oeconemy. And when this salary is con-
trasted with the business & profits of an ordinary practitioner at
the bar in this section of the country, it is now to me a matter
of surprize that any such would seak the office except for the
Honor thereof. My reason for the latter and so recent determi-
nation is, that I am engaged in building a house & residence for
myself & family, and my absence during our fall circuit would
be attended with serious losses in a pecuniary point & would
defeat me in having my dwelling in readiness for the reception of
my family this fall.
I shall ever feel grateful to my friends for the confidence they
reposed in me in giving me a seat upon the bench; how far I
have fulfilled their expectations in discharging the duties of that
honorable station, is not for me to premise — they with the mem-
bers of the barr of our circuit & the public are to Judge thereof —
With this apology for omiting to serve out the residue of the
term, I now tender for your acceptance my resignation of the
office of "President Judge of the 8th Judicial Circuit of the State
of Indiana" to take effect on the first day of September next,
which period will close the current quarter of the present year of
issued by the state to increase the stock in the State Bank. They were
unable to make payments on this either, and Samuel Merrill went to
New York to obtain what security he could for the stock. See below,
386-91.
l Secretary of State file, Archives Division.
262 Wallace Papers
my term ; leaving a vacancy of three months to be filled by execu-
tive appointment.2
I shall this day before the mail departs bearing this letter, advize
the members of the Barr of this place & Logansport (where they
chiefly reside) of my resignation.
With high regard for your public character I remain your
friend & humble serv't
C W Ewing
Noah Noble to Contractors1
Indianapolis, Aug. 18, 1839
Information, not official to me, but derived through others,
from our Fund Commissioners in New York, has kept me in
suspense at the seat of government since I returned from the
lines; and although the news alluded to is unfavorable to the
progress of our works, I did not feel authorised to say our opera-
tions must be suspended, until officially so advised ; and therefore
I have remained silent, with the hope that our daily mail would
bring us something to brighten the prospect. Enough however
is now known to justify me in saying the August payment will
be unavoidably postponed beyond the month and perhaps for
several months.2
In my intercourse with you I have assured you that the late
negotiations of our Fund Commissioners would provide us with
funds ample for the year, and they had no reason to doubt the
sufficiency of the engagements entered into. It seems however
that the Bankers who purchased our bonds, sent them to England
to raise the money to make payment, and that the agent has
2 Henry Chase was appointed president judge on August 19, 1838, to
complete Ewing's term. Record of Executive Commissions, 1837-1845,
in Archives Division. John W. Wright was elected president judge of
the Eighth Judicial Circuit by the General Assembly on December 5,
1839, for the term of seven years from January 9, 1840. House Journal,
1839-40, pp. 41-42. Thomas Johnson was the opposing candidate.
1 Indianapolis Indiana Journal, August 23, 1839.
2 See letter of Milton Stapp to Noble, August 6, 1839, above.
Noble to Contractors, August 18, 1839 263
returned without selling them, in consequence of which, the
Bankers cannot pay the promised instalment and have so notified
our Fund Commissioners.
Relying upon the receipt of your earnings at the usual period
for making estimates, this event will frustrate your business plans
and being the first suspension that has happened to us, it may be
some cause for alarm to you and to the public. But if we look
to the experience had in those states that preceded us in internal
improvement as well as those like ourselves, now engaged in their
construction, we will find in almost every instance something has
occurred to arrest the progress of their works, and without inflict-
ing any very serious or lasting injury. I am glad to add that our
Fund Commissioners do not view it as a permanent interruption
to the works.
I am aware that the occurrence must subject you to much in-
convenience and perhaps to embarrassment. Many of you after
examining your individual resources have contracted debts with
laborers, farmers and merchants, and being deprived of your
expected supply of funds you cannot pay. The failure to comply
with your engagements not being chargeable to any delinquency
on your part, but to the derangement of moneyed matters both
foreign and domestic, it is believed your creditors will be patient;
and that they may fully understand what are your means for
payment, the Resident Engineer will make a careful estimate of
what is due you from the state. The rule established for the pro-
tection of laborers shall be strictly enforced ; but in any case
where the remedy given by law is resorted to by the institution
of suit, we will feel ourselves absolved from the obligation it
imposes.
Whether under existing circumstances it will be advisable for
you to continue your operations you can best determine. If you
should do so, I would advise that your force be small until our
Fund Commissioners provide the necessary means.3
N. Noble
3 At the meeting of the Board of Internal Improvement on November
18, 1839, it was "ordered unanimously, that with the exception of the
Wabash & Erie Canal from Lafayette to the state line, and the dams
264 Wallace Papers
Milton Stapp to Noah Noble1
City of Newyork August 20th 1839
Noah Noble Esq President &c
Sir, Since I last wrote you have been using every exertion in
our power to obtain money for the continuation of our works of
internal improvement, but I fear we shall not succeed. The
Moris Canal and Banking Co owe us 1st August $117 513.30
1st Sept $140,000 1st October $200,000 1st Nov $230,000 1
Deer $160,000 1st January $190,000 & so on &c. Other Banks
owe us (nearly all owe $381,800) With these resources we had
expected to have carried on the works to the limits without much
trouble But the Banks having given us notice that they can pay
no more leave us entirely in the dark. We have been trying to
make arrangement to meet our Bank drafts authorised to be drawn
to the 1st Sept but fear we will not be able to do so. After that
is paid we wish to get as much as we can in currancy and lend
it out to aid you in geting along in some degree but in this I fear
we are doomed to disappointment; so that the best advice I can
give you is to stop as much of the work as you can and as slowly
on other works, yet to be preserved, the work at Lawrenceburgh, and
Bridge at Harrison, the public works be immediately suspended." The
chief engineer was to give the necessary orders to the resident engineers
in charge of various works. Further instructions were given on reduc-
ing the corps of engineers and taking an inventory of all public prop-
erty. Record of the Proceedings of the State Board of Internal Improve-
ment of the State of Indiana, in Archives Division, Indiana State
Library.
Whereas Noble's letter in August left the contractors some leeway as
to whether or not to go ahead, the order that went out from the chief
engineer was peremptory. At least one engineer in the northern part
of the state was ready to defy the order, saying it violated that clause
of the modification bill of the last session requiring the consent of the
contractor before any contract could be canceled or transferred. See
Indianapolis Indiana Journal, November 30, 1839. Contractors on the
Madison and Indianapolis Railroad hired several hundred hands to go
ahead with the work even though there was no one to supervise them.
The board finally gave in to the contractors in this instance and returned
an engineer to supervise the work. Record of the Proceedings of the
State Board, August, 1840.
1 Noah Noble Papers, Indiana State Library.
Moore to Noble, September 13, 1839 265
as possible. In doing this it is of course your business to select
the works to be worked on mostly.
You will find by examining the vouchers for work done from
the 1st of March to the first of August, that you have expended
more than half of the amt for the year and that some works have
got much more than some other works, this perhaps is right I
only call your attention to it. Of the $400,000 borrowed for the
railroad2 $100,000 was paid 1st May & 1st June the ballance has
been and will be paid as we collect the other due from the Moris
Canal & Bkg Co in a ratable proportion. The money already
collected of that $400,000 has been very properly appropriated on
other works because the Railroad did not then want. It will be
for the board over which you preside to say whether this work
should not be favourably considered, by your board in future
appropriations. If money cannot be had to carry on all. / only
make the suggestion
Scott is now in Boston when he returns we will give you
our joint oppinion about money matters. He will be here on
thursday or friday
Very respectfully
Milton Stapp
Henry C. Moore to Noah Noble1
Connersville Sept 13th 1839
Dear Sir I have just received yours in which you want the
contractors advised to suspend work till we get in Funds again.
I will do as you request — Mr. Noel says however that Mr
Willey got a letter from you similar to the one you wrote me,
in which you say that there is a reasonable hope of getting enough
to pay the present Estimate soon, and that he so tells contractors,
- The reference is to the Madison and Indianapolis Railroad. See
above, 166.
1 Noah Noble Papers, Indiana State Library. Moore was superin-
tending construction of the Whitewater Canal. His letter is typical of
the letters which Noble was receiving from the various superintendents
and contractors.
266 Wallace Papers
& that he & they, are encouraged by it, & some have determined
in consequence to go ahead again — Willey himself has I believe
concluded to go on —
I will try to have them stop as soon as possible. I wish the
laying of stone to be suspended. . . .
It will be the last of the month before we get the estimate
made out entirely — we are re-measuring every thing — every stone
separately, & taking every thing with the greatest care, & it takes
time to do so — Yours Respectfully
Henry C. Moore
[Addressed :] N Noble Esqr Canal Comr Indianapolis Ind.
Wallace to Secretary of State1
The Secretary of State will issue a writ of Election directed
to the Sheriff of Ripley County — requiring him to give notice that
an election will be held in said County on the third Monday in
October to elect a Senator to fill the vacancy occasioned by resig-
nation of Thomas Smith — 2
Sept'r 20th 1839 D Wallace
[Endorsed by Secretary of State:] Issued accordingly — Sep-
tember 21st 1839.
William P. Bryant to Wallace1
Rockville Sept 23rd 1839
Dear Sir
I find it impractable for me to serve in the senate of this state,
at the next session of the General Assembly without a greater
pecuniary loss, than I ought to, or am able to bear. You will
therefore do me the favour to accept of this my resignation. And
1 Resignations folder, Secretary of State file, Archives Division, Indi-
ana State Library.
- Smith, a Democrat, had been elected to represent the Fourth Dis-
trict in Congress. James H. Cravens, a Whig, was elected state senator
in his place. Indiana Election Returns, 1S16-1851, pp. 98, 250.
1 Resignations folder, Secretary of State file, Archives Division.
Wallace to Judah, September 23, 1839 267
fill the vacancy thus Occasioned, with the best wishes for your
health & happiness.
I reman Cincerely Your Obedient humble Servant
Wm. P Bryant
To His Excellency David Wallace
Governor of Indiana Indianapolis
N. B. please make the 20th or 25th of next month the day of
Election Yours W P B
[Addressed :] To his Excellency David Wallace Governor of
Indiana Indianapolis
[Endorsed:] W. P. Bryants resignation] as senator — Parke
County The Secret'y of state will issue a writ of election to fill
the above vacancy. The election to be held on the 3rd monday
in October next Sept'r 25 18392
D. Wallace
[Endorsed by secretary of state:] Writ issued, Sept. 25th 1839
Wallace to Samuel Judah1
Indianapolis Septr 23d 1839
Dear Sir
I owe you an apology for not answering your letter containing
an outline of your court project.2 — With a view to sound Black-
ford on the subject, and to procure the necessary statistics you
suggested, I carelessly named to him that the labours of the
Supreme Court must in a short time become so great, that the
judges could not by even extraordinary exertions get through the
Docket — and that the consequence would be a postponement of
justice — He observed that that might be the case some years
hence — but that now they had no difficulty. This cast a damper
over me — and I concluded to wait the result of the election, and
2 Joseph A. Wright was elected to complete Bryant's term. Wright
was a Democrat, Bryant a Whig. Indiana Election Returns, 1S16-
1851, 251.
1 Samuel Judah Papers, Lilly Library, Indiana University.
2 Judah's letter has not been found.
268 Wallace Papers
the prospects of the money market. But both these have proved
so miserable — that it strikes me, that a more unpropitious moment
could not be selected to bring forward such a measure. The
effort to create a new office and a new salary with the present
heavy taxation on the people, could not be otherwise than odious to
them —
What am I to understand from your intimation, that if cer-
tain things transpire that "there will be an impeachment next
winter?" Who will be impeached? Long, or the members of
the old Board ? Here I confess you are somewhat mystical.3
You state that Scott & Merrill in their published card, in
New York — have "asserted in the face of the civilized world
downwright falsehoods."4 — Wherein do these falshoods consist?
3 The only mention of possible impeachment proceedings found in
the legislative journals were those against John Woodburn, a member of
the Board of Internal Improvement. Senate Journal, 1838-39, pp. 345-46.
The reference here may be to Elisha Long, another member of the
board.
4 This was a statement of the "Public Debt and Resources of Indi-
ana," signed by L. H. Scott and Samuel Merrill. Written no doubt to
attract new investors and calm the fears of those who had already
invested in Indiana stocks, they tried to present as favorable a picture
as possible and in doing so made exaggerated if not false statements:
for example, 90 miles of the Wabash and Erie Canal were finished and
in use, 55 additional miles nearly completed; the canal lands still unsold
would "fall but little short of completing the canal to Terre Haute";
clear profit on state bank stock exceeded $300,000; interest on internal
improvement loan had been provided for by taxation and interest from
surplus revenue and more of latter could be made available for this object.
Quoted in Indianapolis Indiana Journal, September 20, 1839, from New
York City papers.
The above statement was refuted by "a citizen of Dearborn" in a
communication to the New York Journal of Commerce. Instead of the
interest being paid by taxation, he pointed out that it was being paid
out of the money borrowed. Also, the coming General Assembly had
been elected expressly to prevent any increase in the taxes which were
already so oppressive that many persons were on the verge of resisting
the revenue laws, and the State Bank was on the verge of bankruptcy
because of the assistance given to complete the internal improvements.
Milton Stapp, one of the Fund Commissioners, immediately replied in a
letter to the same newspaper, pointing to the revenue law of February,
1839, which levied a tax of 30 cents on each $100 of taxable property
for payment of the interest (none of which had been collected as yet),
and that there was no evidence of resistance to the payment of the tax.
Wallace to Judah, September 23, 1839 269
You delivered a speech last winter, which I have preserved
among my public documents to have bound — they are now at the
Book Binders — or I should again look into it. I preserved it
because of the information it contains on the subject of finance. —
I should be glad to be enlightened upon this matter —
On the subject of speaker, I confess that I have given up all
thought about it — supposing that the Democrats would have it all
their own way. — I am confident no Whig can expect it — How-
ever it seems to me that if you are a candidate, it would not be
very difficult to give you the Whig vote.5
I expected a few days since to have visited your place, but
sickness prevented me — I am now just able to sit up and write —
How would Jonathan McCarty run [ ?] with you for Govr.
Would he not stand ware and tare next year better than myself
— you doubtless remember that last winter I intimated to you
that I had no desire of being a candidate, and if the Whigs could
only unite upon another I would cheerfully step aside — This
however is in confidence — I wish you would think of it and
speak freely and frankly what you believe. McCarty is a most
indefatigable electioneer and by the way formidable on the
stump — has had nothing to do with our internal Improvements
— and can occupy the same ground which the Van Buren Candi-
dates no doubt will — 6
In expectation of hearing from you soon — I remain Ur Friend
& obt st
D. Wallace
Saml Judah Esqr Vincennes
The "citizen of Dearborn" was believed to be Amos Lane, but it turned
out to be his son-in-law, George P. Buell. Both communications were
reprinted in the Indianapolis Indiana Journal, November 2 and 9, 1839.
5 James G. Read, a Democrat, was elected speaker by a vote of 51
to 37 for Judah. House Journal, 1839-40, p. 5. The Whigs had suffered
a major defeat in the elections of August, 1839. The new House of
Representatives had 39 Whigs and 61 Democrats, while in the Senate
there were 23 Whigs and 22 Democrats. Charles Kettleborough, Con-
stitution Making in Indiana, Volume I, 1780-1851 (Indiana Historical
Commission, 1916), 161.
6 McCarty was a strong contender for the nomination for governor
but the choice of the convention which met in January, 1840, was Sam-
270 Wallace Papers
Milton Stapp to Noah Noble1
City of Newyork Oct 3d 1839
Dear Sir Yours of the 20th sept I found on my return from
Baltimore. In answer to that part of your letter which speaks of
the Eel river dam, and the finishing the white water canal so
as to save work already done, I advise you to take some of the
currancy that we are sending to you and use it for that purpose
surely the board will allow all such work first to be done. We
have sent out by Merril near $50,000, by Dr Coe over $4000
and I think that Sherwood will pay between this and the 1st
Jany over $100,000 and that we will get from other sources by
that time near $100,000 more. I think you can use a part of
this money for the purposes you name It will all be paid in
currancy. I do not yet know how our interest is to be paid I see
Biddle on the subject to morrow.2 I will start home on the 6th
or 7th. Very respectfully
M Stapp
[Addressed :] Noah Noble Esq Indianapolis Indiana
uel Bigger. Following the convention, the Terre Haute Enquirer
(issue of February 15, 1840) printed what they believed was the result
of ballotings by the delegates. On the first ballot Wallace received 38
votes, McCarty, 47, Bigger, 33, and John W. Payne, 32; on the second
ballot McCarty led with 61, Bigger had 56, Wallace, 23, and Payne,
17. On the third ballot Wallace's friends threw, their support largely to
Bigger and he received a majority of 84 votes, while McCarty had 72,
Wallace, four. The editor attributed McCarty's defeat to the influence
of Caleb B. Smith, who had a grudge against him.
1 Noah Noble Papers, Indiana State Library.
2 E. R. Biddle, member of the board of directors of the Morris
Canal and Banking Company. He was a cousin of Nicholas Biddle, head
of the United States Bank.
Belmont to Treasurer of State, October 11, 1839 271
August Belmont to Treasurer of State1
New York, October 11, 1839
To the Treasurer of the State of Indiana, Indianapolis:
Sir — I have the honor of enclosing you herewith a letter re-
ceived by the Liverpool steamer from my principals, Messrs.
N. M. Rothschild & Sons of London for you.
The unsatisfactory turn which the arrangements of the Bonds
of the State of Indiana is taking by the reluctance of the Morris
Canal Company and the Commissioners of your State to come up
to the tenor of the contract, is indeed very mortifying and dis-
agreeable for my house and myself in particular.
According to the tenor of the contract it remained the duty of
the State Commissioners to put Messrs. Rothschild & Sons in
funds for their advances on the 1st of August last, as they had
received in due time, the necessary notice on the part of Messrs.
Rothschild of their inability to sell the Bonds in Europe.
Nevertheless and notwithstanding the repeated and urgent de-
mands for remittances, nothing has yet been done towards taking
the stocks out of the hands of my principals, which occasions
them in the present moment a good deal of inconvenience.
Messrs. Rothschild have hitherto done every thing to save the
credit of the State of Indiana, and have abstained from any
measure which might lead to a depreciation of the character and
price of its bonds, but if not immediate steps are taken to remit'
l Documentary Journal, 1839-40, Senate Doc. No. 8, pp. 154-56.
Belmont's letter and its enclosure were transmitted to the Senate on
December 20, 1S39, by the Treasurer of State in response to a Senate
resolution, requesting information on the amount of gold or silver re-
cently sent to New York to meet the interest payments due on state
bonds sold to the Morris Canal and Banking Company, and informa-
tion on why the state had been called on to pay the interest on bonds for
which they had received no payments. N. B. Palmer, Treasurer of
State, wrote that he had no official information as to the amount of gold
and silver forwarded to New York as it was not required that any
record of such transaction be filed in his office. However, he no doubt
knew full well about the action of the State Bank directors and the
amount sent. See below, 306-8n. L. H. Scott, Fund Commissioner, sup-
plied the requested information in a report sent to the Senate on January
6, 1840. See below.
272 Wallace Papers
them at once the full amount of their advances, they will see
themselves forced to have recourse to a forced public sale of your
bonds, at whatever they will fetch, coming back upon the Morris
Canal Company and the Commissioners of your state for any
deficiency thereon. I trust, however, that the immediate action
on your part will prevent such a course, and expecting your
early answer,
I remain most respectfully, Sir, your obedient servant,
(Signed) August Belmont
[Enclosure]
London, 12th Sept. 1839
To the Treasurer of the State of Indiana, Indianapolis
Sir — We beg to address this letter to you, as we understand
there has been a change in the Department for the administration
of the finances of your State, since we last communicated with
the Commissioners; and we are desirous of giving information to
the proper quarter of the irregularity which has occurred in the
transactions we have had in your securities with the Morris
Canal and Banking Company, at New York, in order that the
necessary attention may be given to the same.
The dividend due last July on $1,700,000, Indiana sterling
5 per cent bonds made payable with us and amounting to
£9,562 10 — instead of being covered in advance in the usual way
by remittances of bills, was provided for by the above named
Institution with a consignment of $60,000 Indiana State 5 per
cent, bonds for sale, which were unavailable for the purpose, as
they were not disposable in our market.
We disapproved exceedingly of this exceptionable provision of
a dividend by means of another portion of stock, and it was
only out of consideration for the credit of the State of Indiana,
that we waived our objections and made the payment at the due
time of the July dividend. We communicated immediately with
the Morris Canal Company, upon the subject and desired them
to take $60,000 Indiana, and remit us the funds for the dividend,
but they have not yet rendered any compliance with, or attention
to our wishes. We request you will therefore attend to a proper
Stapp to Noble, October 23, 1839 273
arrangement being made for this dividend by covering our
advances upon it by an immediate remittance of bills.
We have also to recommend particularly to your attention the
provision for the next January dividend on the Indiana Sterling
Bonds, made payable with us, we shall require to be made to us
in the regular way by remittances in bills. We shall be obliged
to refuse payment, if we are not in receipt of the funds, and we
hope they will be remitted to us in due time, before dividend, in
order that no delay or irregularity may occur which would
prejudice the credit of your state.
According to the agreement entered into, on behalf of our
two houses by Mr. Belmont, with the commissioners of Indiana,
the amount of our advances of £110,000, against the consignment
of $700,000, Indiana Sterling 5 per ct. bonds made by them, &
afterwards placed into the hands of the Morris Canal Co. We
gave the stipulated notice of four months, for our payment to
this latter institution, and expected it to take place as agreed
upon ; but we have had no reimbursement made to us, & as the
stock is unsaleable in the dull state of our market, we continue
being kept out of our funds.
We have expressed ourselves strongly upon the subject to
the Morris Canal Co. ; but they have done nothing in regard to
our repayment, and from the participation which your depart-
ment has had in the business, we request their irregular and
inconvenient proceeding may have your attention.
We remain, respectfully, Sir, your Obt. Serv'ts,
[Signed] N. M. Rothschild & Sons
Milton Stapp to Noah Noble1
Madison October 23d 1839
Dear Sir I have received yours of the 20th Inst and noted
contents.2 I believe our people are very anxious to take the aban-
doned contracts at estimated prices and take state bonds, but I
1 Noah Noble Papers, Indiana State Library.
2 Noble's letter has not been found.
274 Wallace Papers
think we can do better.3 Since receiving your letter at Newyork
saying that our business men appeared willing to take hold of
the work I have been planning for carying their wishes into
effect and have succeeded so far as our citizens are concerned
but there are so many conditions about the matter that I fear
[ ?] its ultimate end, but have hopes of success. I have entered
into a contract with them which requires the confirmation of Mr.
Scott, and which he will doubtless do if he is not prejudiced
against one point after his confirmation, we have to know that
the controller of Newyork will take our bonds before the contract
is consumated.4 He is now taking them and I hope he will con-
tinue to do so. these two conditions complied with and I feel
confident we shall be able to raise the railroad loan this matter
however is in confidence, for the present I hope you will not
3 Stapp is referring here to work on the Madison and Indianapolis
Railroad.
4 An agreement between Fund Commissioners Stapp and Lucius H.
Scott on the one part and William Hendricks, John Woodburn, George
Leonard, Victor and John King, residents of Madison on the other
part, was entered into on October 19, 1839, for the sale of state bonds
to obtain funds to carry on construction of the Madison and Indianapolis
Railroad. In the words of the contract, "the said party of the first part,
have this day sold to the said party of the second part, Indiana State
Bonds to an amount not exceeding four hundred and fifty-five thousand
dollars of the Indiana five per cent. State stocks . . . for the sum of
eighty-eight dollars to the one hundred dollars of State bonds. The
sums to be paid by the party of the second part, to be laid out and
expended under the direction of the Board of Internal Improvement."
The bonds were to be delivered on or before December 10, 1839, and
were to be paid for "in bank paper current in the ordinary business
transactions of the State of Indiana at the time of payment, in install-
ments as follows, to wit: on or before the first day of March, 1840, the
one-sixth part of the amount so sold . . . and so on, one-sixth part every
two months, until the whole shall be paid." It was further agreed,
"that if no satisfactory arrangement can be made . . . with the Comp-
troller of the State of New York, on or before the first day of Janu-
ary next, on the usual terms of accepting said bonds of similar character
as heretofore ... at the rate of from 85 to $100, or if no other
satisfactory disposition of said bonds can be made . . . then the said
party of the second part will not be bound to take said bonds, or
confirm said contract." Documentary Journal, 1839-40, House Doc. No.
17, pp. 181-83.
Information concerning the contract and transactions growing out of
it, as brought to light in testimony before a Senate investigating com-
Stapp to Noble, October 23, 1839 275
mention it to any one as the company here do not wish these
matters made public unless they succeed.
It seems that Mr. Biddle thinks he cannot pay the January
interest. Well I believe he will pay it but I fear he wishes to
force us to do something more for him which I for one will
never do; I have written to him this day that we shall still expect
him to pay the interest, and we must keep this idea up so far as
Mr Biddle is concerned, but at the same time we must provide
in secret for the payt of the interest I will be in Indianapolis
on the 1st of next month or before and have written to Scott to
meet me there then at which time I hope to see you at home so
as to consult about matters before the meeting of the boards on
the 4th. I send you the statement relative to the state bonds as
requested. If you intend reporting this matter to the legislature
I will be pleased to learn what course you intend to pursue so
that our reports may harmonize
Very respectfully
Milton Stapp
mittee during the legislative session of 18+1-42, were as follows: the
Madison company had no capital of its own, but was formed solely for
the purpose of continuing construction of the Madison and Indianapolis
Railroad; members of the company denied that any bonds were placed
in their hands at the time the contract was made; Stapp apparently kept
them in his possession. The following year, when the contractors wished
to go ahead with work on the railroad, an agreement was reached
whereby they were to receive one third of their pay in cash and two
thirds in bonds at par value; forty-one bonds were disposed of in this
way in October, 1S40. Early that year Stapp had sold 180 state bonds
in New York, and though these were not ostensibly company bonds,
Stapp asked the company to accept the transaction as their own (the
company suffered a loss from the sale). The contract was due to
expire in December, 1840, but it was renewed and in the summer of
1841 fifty-nine bonds were disbursed to contractors at 50 to 62^ per
cent par value. For the 280 bonds disposed of, the company owed the
state over $60,000. The investigating committee viewed the entire pro-
ceedings as a fraud against the state. According to the contract, the
bonds were to be sold for cash, the money deposited in the treasury
and drawn out by audited checks; instead, some of the bonds had been
sold in New York on credit and others used to pay contractors. The
state apparently had not realized anything from the contract at the
time of the investigation. See Indiana Documentary Journal, 1841-42,
Senate Doc. No. 6, pp. 158-67, 318-22, 380-91, 398, 42S-30, 450-52, 471-74;
House Doc. No. 12, pp. 296-99.
276 Wallace Papers
Memorandum of Interest due from Indiana on state bonds 1st
January 1840
Payable at the Morris canal & Bk co
agregate
Interest Int
On a/c of Wabash & Erie
Canal $ 870,000-5 21,750
On a/c of Internal improve-
ment 3,832,000-5 95,800
On a/c of Lawrenceburgh &
Indpls rail road 221,000-5 5,525
On a/c of surplus revenue .... 294,000-6 8,820 131,895
Payable at Mercht Bk
On a/c Wabash & Erie canal 100,000-6 3,000
On a/c Wabash & Erie canal 757,000-5 18,925
On a/c Internal impt 400,000-5 10,000 31,925
Payable at Rotchchilds
On a/c Internal impt
£450,000 $2,000,000-5 50,000
8,474,000 $213,820
Bank Loan
Payable at Morris canal &
Bk co 440,000-5 11,000
Payable at Merchants Bank 950,000-5 23,750
Payable at Rotchchilds London
Stg 500,000-5 12,500 47,250
$261,070
On the above internal impt loan, there was $300,000 loan made
since Scott left New York which is not yet consumated. I
would not like it to be made public before I see Scott. The
$500,000 Bank Loan was made by Meril this last summer. I
Judah to Noble, October 26, 1839 277
thought there was a larger Bank loan but my books showed no
more M. Stapp
[Addressed:] Noah Noble Esqr Indianapolis Indiana
Samuel Judah to Noah Noble'
Vincennes Oct. 26, 1839
Dr Sir — After I reed your letter I had a long and serious
conversation with Mr Law. — We ascertained from Mr Voor-
hees who happened to be here that about $130,000 would locate
grubb and grade, as well as make the necessary culverts for the
distance hence to Mt. Pleasant. — 2 Mr Law promised me to
cause the matter to be considered by our Bank Board, and also
by the Stock-holders in their meeting on the 8th Novr. —
I suggested that if the Bank here would take the Bonds of the
state, we could authorise it to issue a specific amount in one two
and three dollar bills — by way of compensating profit to the
Branch. —
Yourself will have a fiery ordeal to pass soon — but weak and
miserable as I consider your colleagues — it will not gratify me to
see the present board made the scape goat of the former. — The
improvement of the Wabash River is now the sole exciting ques-
tion throughout the great valley. — The late convention here
appointed committees whose labours will result in an exhibition
of facts to the public that will forever condemn Blake and all
those men who so long have neglected, and indeed triffled with,
an interest to us so vitally important. — 3 We look upon Graham
as one of the old board — as one who never intended to improve
the Wabash — and indeed you will find it necessary to let him
drop this winter
Can the Branch at Terre Haute be induced to make the neces-
sary advances for the improvement of the Wabash? — Our
Branch can not sustain the Road and that too. —
1 Noah Noble Papers, Indiana State Library.
2 The reference is to the New Albany-Vincennes Road.
3 See below, 350-51n, for the proceedings of the convention held on
October 24.
278 Wallace Papers
My course next session will be as it always has been — such as
my own conscience will approve and as the due course of time
will sanction. — It will be the middle course ; and in travelling it,
God help any of the bands of canting hypocrites and ignorant
knaves who have so long reviled me, that cast themselves in my
path. — For the time has now come that experience has proven
all the measures in referance to the politicks of the state — the
W. & M. canal, the Michigan road — the system — the Bank — on
which I have been continually put down. —
I have reed some singular letters in referance to the speaker-
ship.— It would seem that an effort is to be made to elect Col.
Long. — If such an effort is made, I probably can not succeed;
but I can certainly say, that neither Long, nor any other old
system man of either party in national politicks, can be elected. — 4
Very Respectfully
Saml. Judah
P. S. We have a recorder to elect, & I was told last night that
John Ewing was a candidate !
[Addressed:] Noah Noble Esq Indianapolis Ind
Treasurer of State: Annual Report1
Treasury Department,
Indianapolis, November 1, 1839.
The Treasurer of State, in obedience to the directions of the
"Act concerning the Auditor of Public Accounts, and Treasurer
of State," submits the following report of the receipts and ex-
4 James G. Read, a Democrat, was elected. Elisha Long, another
Democrat, was representing Franklin County. See note 5, p. 269 above.
l Documentary Journal, 1839-40, House Doc. No. 3. The treasurer
made two other reports to the legislature, one on the Three Per Cent
Fund and the other on the surplus revenue. They are printed in ibid.,
House Docs. Nos. 1 and 4. The report of the ways and means com-
mittee of the House of Representatives, made on February 11, 1840,
after examining the offices of auditor and treasurer, gives the receipts
and expenditures of the state government up to January 1, 1840. It is
printed in ibid., No. 31. By that time $295,286 had been paid into the
state treasury as revenue for 1839.
Treasurer's Report, November 1 , 1839 279
penditures of the State, and the operations of the Loan Office,
&c, from the 1st December, 1838, to the 31st October, 1839,
both inclusive.
There was a balance remaining in the
Treasury on the close of the last finan-
cial year of $ 23,471 53
Receipts during the fiscal year from
revenue of
1837 52 45
1838 . 161,182 26
1839 2,387 00
From sales of Michigan Road lands 536 85
From sales of lots, &c. at Indianapolis .. 237 50
From sales of estates without known
heirs 231 99
From incidental sources 134 00
From Interest on Treasury Loans 2,916 70
From Treasury Loans refunded 250 00
From Lawrenceburgh and Indianapolis
Rail Road Company 434 21
The receipts and credits in the college
branch of the Loan Office Depart-
ment have been :
From Commissioner of reserve town-
ship in Monroe county 1,814 00
From Commissioner of reserve town-
ship in Gibson county 500 00
From loans refunded 7,404 50
From interest on loans 4,541 47 14,259 97
The amount paid into the Treasury of
Saline Fund, appertaining to the
Loan Office, has been :
From Commissioner of Saline lands
in Orange county 1,359 15
From Commissioner of Washington
county 211 49
280 Wallace Papers
From Commissioner of Monroe 95 98
From loans refunded 330 00
From interest on loans 2,033 49 4,030 11
$210,124 57
The expenditures during the same pe-
riod, have been:
Pay and mileage of members of the
Legislature, including officers $ 42,562 12
Printing and stationary 17,798 93
Specific appropriations 8,369 18
Contingent expenses 1,059 66
Premium on wolf scalps 335 00
Pay of Probate Judges 3,078 00
Pay of Executive officers 2,716 66
Pay of Judges of Supreme and Cir-
cuit Courts 11,774 55
Pay of Circuit Prosecutors 1,552 57
Pay of Adjutant and Quarter Master
Generals 190 25
Payments on account of State House 1,042 10
Payments on account of State Prison 1,065 36
Payments on account of State Library 437 50
Payments on account of Michigan
Road 486 85
School moneys refunded 311 62
Seat of government 36 87
Estates refunded 1,037 07
Geological survey 1,833 22
Internal improvements 38,000 00
Conscientious fines distributed 7 00
Treasury loans 29,167 00
Fund commissioners, being L. & I.
R. R. loans refunded 434 21
Treasurer's Report, November 1, 1839 281
The disbursements on account of the
college branch of the loan office
have been :
Payments on account of Indiana Uni-
versity, including incidental ex-
penses of loan office 1,749 59
Loans of college fund 11,197 50 12,947 09
Payments and liabilities on account of
Saline fund subject to the loan
office laws, are:
Loans of Saline fund 3,200 00
Saline fund expenses 215 44 3,415 44
Balance on hand, October 31, 1839 30,466 32
$210,124 57
Estimated condition of the treasury for 1840
The probable means of the treasury applicable to the ordinary
expenses of the State for 1840, may be estimated as follows, viz.
Balance in the treasury on the 1st day of
November, 1839 $30,466 32
Revenue of 1839 from poll tax 45,000 00
Amount of treasury loans, which will
probably be refunded in the course of
current year 28,917 00
Sale of lots in Indianapolis 4,000 00 $108,383 32
The liabilities and expenditures for the same period, may be
estimated as follows, to- wit :
Unaudited and other claims which will
be due at the treasury, at the close of
the present quarter, Nov. 30, 1839 .... 14,000 00
Salaries of Judges and Prosecutors 17,500 00
Salaries of Executive officers 3,500 00
Printing — Stationary — Binding, and dis-
tributing the Laws 15,000 00
282 Wallace Papers
Expenses of Legislature, including Offi-
cers and Attendants +0,000 00
Contingent and Specific appropriations 6,000 00
Probate Judges 3,200 00
State Prison 1,200 00
State Library 350 00
Adjutant and Quarter Master Generals 150 00
State House 1,200 00
School moneys to be refunded 200 00
Seat of Government, (including library
fund) 1,760 00
Estates without heirs, to be refunded .... 1,073 00
Conscientious fines to be distributed 536 00
Revenue of 1839, subject to be drawn
by Fund Commissioners 2,387 00 $108,056 00
Leaving an estimated balance in the treasury on the 1st of
December, 1840 of $327 10.
The foregoing exhibits and estimates show that the payments
into the treasury during the financial year 1839, (up to the 31st
October), amounted to $210,124 57, and that the disbursements
during the same period, have been $179,658 25; leaving a balance
in the treasury on the 1st November, 1839, of $30,466 32.
The schedule of estimates for 1840, exhibits the probable means
of the treasury for that year, including the above balance, and all
anticipated payments from other sources, applicable to the ordi-
nary expenses of the State, at $108,383 32.
The expenditures and liabilities of the State coming within the
scope of the ordinary expenses, for the same period, are estimated
at $108,056 00; which will leave in the treasury at the close of
the year 1840, (supposing the claims on the treasury then due
shall have been paid), the sum of $327 32.
In the estimates of the receipts and disbursements for 1839, in
my last annual report, it was anticipated that there would be a
balance in the treasury at the close of 1839 of only, $990 15;
but those estimates were based upon the supposition that the sum
of $40,000, (being the product of five cents on the $100 of the
Treasurer's Report, November 1, 1839 283
property tax), would be appropriated to the payment of interest
on improvement loans; but it being left in the treasury, has of
course, swelled the balance on hand, as now exhibited, much
above the estimate of last year.
I again recur, with pleasure, to the prompt collection and faith-
ful payment into the treasury of the public revenue, by the several
collectors. An apprehension was expressed in my last report, that,
owing to the then embarrassed condition of the country, the col-
lection of the revenue would be more tardy and incomplete than
had thereunto been usual, but fortunately it resulted in as prompt
and complete collection as had been done in any previous year.
But in the present revulsion and derangement in relation to
money matters, and the general pressure, which every where
seems to bear with peculiar severity upon the community, it is
greatly to be feared that the apprehensions intimated last year,
will be fully realized the present, in relation to the collection of
the revenue ; more especially as the amount to be collected the
present, is nearly double that of last year.
If however, the difficulty here apprehended be verified at the
period when it shall become the duty of collectors to make their
payments into the treasury, by a failure to collect any considerable
portion of the revenue, the legislature will be advised of the
extent, and such other matters connected therewith, as will enable
the General Assembly to provide for the contingency in such
manner as it may deem most appropriate.
The assessments the present year show an increase, both in the
number of polls and the amount of taxable property, indicating a
continuance of our usual prosperity and growth, both in popula-
tion and wealth, notwithstanding the pecuniary embarrassments
which seem to bear so heavily upon the country.
It will be seen that the nett revenue from polls the present
year, is estimated at $45,000. This amount, together with the
balance in the treasury, and the amount out on loan, will barely
defray the ordinary expenses of the State for the year 1840. It
will be incumbent upon the General Assembly to provide some
additional means, beyond the poll tax, for the support of the
government for the year 1841. The nett amount of revenue
284 Wallace Papers
which may be expected from the poll tax in 1840 (and upon
which the support of the government for 1841 must rely), can-
not exceed $50,000. There is now no provision by law for any
other means to defray the expenses of 1841, which (if strict
economy be observed), may be estimated at $95,000, leaving a
deficit, to be otherwise provided for of $45,000.
As the expenses of 1841, must necessarily rest upon the revenue
assessed and collected in 1840, the prospective provisions required
to meet this estimated deficit of 1841, will seem to require the
attention of the General Assembly during its present session.2
As the subject of the payment of the interest on the public debt
belongs to another department, I refrain from making any remarks
in relation thereto.
Under the acts of the last session of the general assembly,
loans have been made of funds belonging to the treasury proper,
to the amount of $29,167, at one year, and at ten per cent inter-
est. There has also been received from the State Bank of Indiana
$9,321 13 of the fund arising from the annual tax of 12^> cents
on each share of bank stock for the support of common schools.
This amount together with the interest, has been loaned under
the provisions of the act for loaning the College funds. A sched-
ule of the names of the borrowers of each of these funds is here-
with appended.
The operations in the several departments of the Loan office,
continue to be safe and successful, but some tardiness in payment
of interest has recently occurred, although no sales for non-
payment have yet been found necessary in the present year.
The payments on account of the State House, and incidental
expenses of the last General Assembly, liquidated and paid under
the provisions of the act of 1837 amount to about $650 00, a
schedule of which will accompany my report in relation to the
State House.
All of which is respectfully submitted,
N. B. Palmer
Treasurer of State
2 See below, 328n-29n, for the revenue measure passed at this session.
Treasurer's Report, November 1, 1839 285
Statement A. College Fund
Report of the operations of the College Fund from the 1st
December, 1838, to the 31st October, 1839.
Receipts
Amount received from William Alexander, Commis-
sioner of Reserve Township in Monroe county .... 1,814 00
Amount received from James Smith, Commissioner
of Reserve Township in Gibson county 500 00
Loans refunded 7,404 50
Interest on Loans 4,541 47
Amount over Loaned 402 54
$14,662 51
Contra
Amount over Loaned in 1838 1,715 42
Amount of Loans as per list accompanying 11,197 50
State University, including incidental expenses 1,749 59
$14,662 51
Statement B. Saline Fund
Report of the operations of the Saline Fund from the 1st De-
cember, 1838 to the 31st October, 1839.
Receipts
Amount received from Andrew Wilson, Commission-
er of Saline Lands in Orange county 1,359 15
Amount received from Henry Young, Commissioner
of Saline Lands in Washington county 211 49
Amount received from Milton McPhetridge, Com-
missioner of Saline Lands in Monroe county 95 98
Loans Refunded 330 00
Interest on Loans 2,033 49
$ 4,030 11
Contra
Amount over Loaned in 1838 234 96
Amount of Loans as per list accompanying 3,200 00
286 Wallace Papers
Saline Fund expenses 215 44
Cash on hand 379 71
$ 4,030 1 1
Statement C. Congressional Township Fund
Report of the operations of the Congressional Township Fund,
from the 1st December 1838 to the 31st October, 1839.
Receipts
Cash on hand at last report 244 46
Interest on Loans 103 32
$ 347 78
Contra
Amount paid Trustees in Ripley county 68 82
Amount of Loans 148 00
Incidental expenses 9 82
Cash on hand 121 14
$ 347 78
Statement D. State Bank School Fund
Report of the operations of the State Bank School Fund, from
the 1st December, 1838 to the 31st October, 1839.
Receipts
Amount received from the State Bank 9,321 13
Interest on Loans 922 50
Amount over Loaned 6 37
$10,250 00
Contra
Amount of Loans as per list accompanying 10,250 00
$10,250 00
Contingent Expenses from 1st of December 1838 to October
31st 1839
Paid, John Cain, for postage 87 42
Treasurer's Report, November I, 1H39 287
Paid, J. A. Matson, Commissioner for running the
boundary line between this and the State of Ohio 195 18
Paid, J. M. Wallace, Private secretary of Governor 50 00
Paid, B. Brown, extra services as Sergant-at-Arms
of the H. R. 1838 40 00
Paid, W. F. Reynolds, for enclosing Tippecanoe Bat-
tle Ground 48 25
Paid, S. C. Stevens, counsel in the Saline Land suit
in Dearborn county 215 00
Paid, J. Morrison, Counsel in relation to the L. & I.
R. R. company 20 00
Paid, J. Kelly, repairs on Governor's Circle 50
Paid, M. T. Miller, 2 years subscription for Bick-
nell's Reporter, for use of Treasurer's office 6 00
Paid, L. C. Lewis, for recording deed 1 00
Paid, B. Allee, for repairs on Governor's Circle 2 00
Paid, J. Cain, for postage 82 53
Paid, Espy and Sloan, furniture for auditor's office 14 00
Paid, Morris Hazlett & co. stationary for Auditor's
office 13 13
Paid, S. S. Rooker, repairs on Governor's Circle 1 12
Paid, Rowlett's Interest tables for Treasurer's office 5 00
Paid, Allen and Stadts, repairs on Governor's Circle 1 31
Paid, J. Cain, for postage 113 41
Paid, W. Bowen, for transportation 3 18
Paid, W. Tate, storage of public arms 23 20
Paid, J. Cain, for postage 115 81
Paid, W. Parker, repairs on Governor's House 1 50
Paid, C. Williams, for Map frames 18 00
Paid, B. Allee, repairs on Governor's Circle 2 12
$ 1,059 66
3 The remaining two pages of the treasurer's report which lists the
names of those persons who had borrowed from the various funds are
not reprinted here.
288 Wallace Papers
Fund Commissioners: Annual Report1
[November 1, 1839]
To the Senate and House of Representatives of the
State of Indiana:
The Fund Commissioners respectfully report the state and con-
dition of the Wabash and Erie Canal Fund, and the General
Internal Improvement Fund, including the receipts and expendi-
tures of each from the 2d day of January, 1839, to the 31st day
of October, 1839.
In submitting this report the Commissioners regret that it is
not in their power to present to the Legislature a settlement with
the Board of Internal Improvement for the current year; but will
be under the necessity of making a special report of this matter so
soon as a settlement can be effected with the Board ; nor will our
report shew the exact amount of interest due to the Branch Banks
of the State of Indiana for suspended payments, their accounts
current not having reached us in time to be settled and included
in our Bank balances, when by law our report is directed to be
placed in the hands of the public printer.
WABASH AND ERIE CANAL FUND
There has been received since the date of the last annual report :
For state bonds sold— $400,000
5 per cent, bonds at 90 —
proceeds $ 360,000 00
For principal and interest, pay-
ments on canal lands sold .... 25,367 62
For tolls on canal 3,625 58
Total receipts $ 388,993 20
There was due from the fund
of the date of our last
report 31,208 06
i Documentary Journal, 1839-40, Senate Doc. No. 1.
Report of Fund Commissioners, November 1 , 1839 289
Since which there has been expended : —
For interest on state bonds .... 43,784 63
For interest on accounts 4,616 43
For per diem and expenses of
fund commissioners 1,973 92
For clerk hire, expenses of of-
fice, &c 623 87
82,206 91
Unexpended 306,786 29
There is now due to this fund : —
From John Scott's estate 101 57
From Indianapolis branch bank 5,433 62
From David Burr 8,309 18
From board of internal im-
provement 226,649 64
From Morris Canal and Bank-
ing Company 168,052 34
From Lucius H. Scott 154 90
From internal improvement
fund 32,919 70 441,620 95
And there is due from this fund : —
To state bank 67 98
To Merchants Bank 87 00
To Fort Wayne branch bank 73,000 47
To Lafayette branch bank 61,667 90
To James Farrington 8 53
To Wm. S. Hubbard 2 78 134,834 66
Due to this fund 306,786 29
290 Wallace Papers
General Summary of Receipts and Expenditures of Wabash and
Erie Canal Fund.
There has been received since the commencement
of the work: —
From road and canal fund ....$ 1,892 45
From sale of state bonds,
$1,727,000, proceeds 1,687,000 00
From premium on state bonds,
exchange and interest on
deposits 88,648 6^/2
From sale of canal lands de-
ducting expenses 274,304 71
From trespass on canal and
sale of yoke of oxen 120 00
From canal tolls 5,023 95
Total receipts 2,056,989 75/2
There has been expended : —
For construction of Wabash
and Erie canal, including all
contingent expenses 1,498,080 07^2
For payment of interest on
state bonds 252,123 39
Total expenditures .. 1,750,203 46 *<
Unexpended 306,786 29
INTERNAL IMPROVEMENT FUND
There was on hand and due the
fund at the last annual re-
port 809,163 69^4
Since which there has been received: —
From sale of
State bonds..$l,552,160 00
Report of Fund Commissioners, November 1, 1839 291
From bal. in-
terest on de-
posits 42,868 32
From sinking
fund com-
missioners .. 34,650 82
From treasurer
of state 28,000 00
From Law-
renceburgh &
Indian-
apolis R. R.
Co 173 25 1,657,852 39 2,467,016 08^4
And there has been expended : —
On account of Central Canal 298 92j/<
On account of Cross-cut canal 1 00
On account of per diem and
expenses of fund comr's 2,470 47
On account of auditor's salary 500 00
On account of office rent, clerk
hire, expense of engraving
and numbering bonds 2,049 39
On account of interest on state
bonds 141,760 94
On account of property re-
ceived on compromise with
Messrs. Cohens & Josephs .. 4,476 87 151,557 59^
Unexpended 2,315,458 49*4
There is due to this fund : —
From Fort Wayne Branch
Bank 18,641 57
From Bedford Branch Bank .. 1,068 30
From bond and mortgage on
account of Cohen debt 113,300 00
292 Wallace Papers
From Board Int. Imp. (to be
accounted for by receipts for
construction and contingen-
cies for the past year) 1,355,756 80^4
From James Farrington 36 83
From Lucious H. Scott 254 90
From Milton Stapp 58 59
From Morris Canal and Bank-
ing Company 647,562 12
From other eastern banks for
state bonds sold 731,461 00 2,868,140 \\yi
And there is due from this fund : —
To Evansville branch bank .... 93,854 27
To Lafayette branch bank .... 111,704 00
To Madison branch bank 33,429 41
To Lawrenceburgh branch
bank 50,095 22
To New Albany branch bank 88,478 80
To Richmond branch bank .... 14,355 60
To Terre Haute branch bank 28,709 33
To Vincennes branch bank .... 15,468 27
To Lawrenceburgh and Indi-
anapolis Rail R'd Company 2 81
To Indianapolis branch bank .. 83,646 41
To Wabash and Erie Canal
fund 32,919 70
To Wm. S. Hubbard 17 80 552,681 62
Due to this fund 2,315,458 49 1/4
General Summary of Internal Improvement Fund
There has been received on this fund : —
From sale of state bonds 5,832,160 00
From commissioners of sinking
fund, interest on surplus rev-
enue 80,661 93
Report of Fund Commissioners, November 1, 1839 293
From treasurer of state, im-
provement tax 78,000 00
From premium on state bonds 31,500 00
From interest on deposits and
exchange 133,571 99
From overplus drawn for rail
road surveys replaced 272 70
From sale of oxen and wagon 105 00
Total receipts 6,156,271 62
There has been paid out on acc't of this fund : —
On White-water canal 543,713 24
On Central canal 667,467 96
On Wabash canal 191,799 16^4
On Cross-cut canal 240,231 24
On Madison and Lafayette
Rail road 970,690 88
On Jeffersonville and Craw-
fordsville road 152,024 11
On New Albany and Vin-
cennes road 296,067 36
On Wabash river 5,960 61
On Michigan & Erie Canal .... 16,242 65
On Indianapolis and Lafay-
ette road 2,704 14
For interest on state bonds .... 405,962 44
For gen. incidental expenses of
board internal improvement 26,767 71
For per diem and expenses of
fund com'rs 5,895 43^
For auditor's salary 1,007 34
For expenses of office, clerk
hire, engraving, and number-
ing bonds 5,899 01*4
For rail road surveys, repaid
to Wabash and Erie canal
fund 22,641 50
294 Wallace Papers
For property received on com-
promise with the Messrs.
Cohens & Josephs 285,536 40
To R. D. Owen per act of leg-
islature2 201 93
Total expenditures .. 3,840,813 12^4
Unexpended 2,315,458 49 >4
The foregoing statement of the fiscal concerns of our System of
Internal Improvement, gives to you a balance-sheet account of the
operations of the Fund Commissioners since their last annual
report. But in order that you may be fully apprized of the extent
of your liabilities and the means of payment, we will endeavor
to lay before you a plain statement of the demands against you,
with the resources under the control of the Commissioners, appli-
cable to the satisfaction of these demands, so as to enable you
to legislate with that light so necessary for the statesman with
enlarged and liberal views, who is determined (amid the dark-
ness and gloom with which he is surrounded,) to lead his coun-
try through a crisis with its faith inviolate, and its institutions
fixed on a sure and firm foundation.
Before presenting to you the situation of our demands and
debts as proposed, we will be permitted to remark, that it is not
for us to predict the effect the present derangement of the mone-
tary affairs of the country may have upon the collection of our
debts, we hope and believe, that the wealth of our country in its
rich soil, industrious citizens, and productive labor, with an ener-
getic and enterprising commercial community will soon rise above
her present embarrassments and liquidate the debts of the country
in a satisfactory manner.
Should this be the case, we have every confidence that the
debts due to us in the foregoing accounts will be satisfactorily
2 The sum of $193 plus interest at the rate of 6 per cent from April
25, 1836, was authorized to be paid to Owen from the Internal Improve-
ment Fund. Laws of Indiana, 1836-37 (local), p. 153. The act does not
specify the reason for the appropriation other than that it was in con-
nection with the Princeton to Mount Vernon Turnpike.
Report of Fund (Jomniissioners, November 1, 1839 295
arranged, and promptly paid. The integrity of the institutions
indebted to the state, stands before us unimpeached, and their
ability to meet their engagements in times of ordinary prosperity,
cannot be doubted.
But if, on the contrary, the commercial and moneyed embar-
rassments with which we are surrounded shall continue to press
upon us until the moneyed institutions of the country shall ex-
haust the means they possess in sustaining their credit, and sink
under the laudable effort; then, indeed, may there be danger of
long delay in their collection, if not ultimate loss. In making the
exhibit proposed, we are accurate in the principal sums due from
and owing to us, but do not pretend to entire accuracy in our
calculations of interest on the ordinary amounts stated in the
account, but are near enough to the real state of the interest for
all legislative purposes.
THE WABASH AND ERIE CANAL FUND
There is due and owing to this fund, from the Morris Canal and
Banking Company:
Due at this date $ 38,052 34
Due on the 1st of Dec. 1839 50,000 00
Due on the 1st of January, 1840 80,000 00 $ 168,052 34
Due from the Internal Improve-
ment fund 32,919 70
Due from John Scott 101 57
Due from David Burr 8,309 18
Due from Indianapolis Br. Bank 5,433 62
Due from L. H. Scott 154 90 46,918 97
Interest on the above debts to 1st
Jan. 1839 (est.) 8,300 00
Interest on canal lands sold (est.) 22,000 00
Tolls for the last quarter of this
year (est.) 1,000 00 31,300 00
Making in all $ 246,271 31
296 Wallace Papers
And there is due and owing from
the fund
To the State Bank 67 98
To the Merchant's Bank,
New York 87 00
To the Fort Wayne Branch
Bank 73,000 47
To the Lafayette Branch Bank 61,667 90
To William S. Hubbard 2 78
To James Farrington 8 53
To Contractors on estimates to
31st October, 1839 64,115 00
For interest on state bonds due
1st January, 1840 43,675 00
For Interest on the above bank
debts (estimated) 2,500 00 245,124 66
Leaving 1,146 65
wherewith to continue the construction of this work
when the foregoing balances shall have been settled
and paid.
The annual interest payable on
state bonds sold for the con-
struction of this work is 87,350 00
Of which there is annually paid,
interest derived from canal
lands sold (estimated) 22,000 00
Tolls from the canal 4,000 00 26,000 00
Leaving $ 61,350 00
to be paid each year out of the principal derived from
the sale of canal lands or to be provided for by legis-
lative enactment.
The state has sold bonds for the
construction of this work to
the following amount, to
wit:
Report of Fund Commissioners, November 1, 1839 297
6 per cent, bonds 100,000 00
5 per cent, bonds 1,627,000 00 $ 1,727,000 00
To reimburse which the state has
a fund in part as follows, to
wit:
Am't due & owing for canal
lands sold (about) 370,000 00
Ninety thousand acres of land
unsold, estimated by the
chief engineer at 630,000 00 1,000,000 00
Leaving $ 727,000 00
to be provided for from the year 1862 to the year
1889.
INTERNAL IMPROVEMENT FUND
There is due and owing to this fund: —
From the Morris Canal and
Banking Company
Due at this date $ 499,562 12
Due 1st Dec. 1839 50,000 00
Due 1st Jan. 1840 50,000 00
Due 1st Feb 50,000 00 $ 647,562 12
From other Banks in New York
Due at this date 382,361 00
Due 1st December, 1839 66,000 00
Due 1st January, 1840 85,000 00
Due 1st February, 1840 17,000 00
Due 1st March, 1840 5,600 00
Due 1st April, 1840 15,000 00
Due 1st May, 1840 25,000 00
Due 1st June, 1840 34,100 00
Due 1st July, 1840 40,000 00
Due 1st August, 1840 37,000 00
Due 1st September, 1840 10,000 00
298 Wallace Papers
Due 1st November, 1840 5,000 00
Due 1st December, 1840 5,000 00
Due 1st January, 1841 5,000 00 731,461 00
From Bonds and Mortgages
taken for part of the Cohens'
debt
Due 1st July, 1840 5,000 00
Due 1st July, 1841 5,000 00
Due 1st July, 1842 5,000 00
Due 1st July, 1843 57,000 00
Due 1st July, 1848 41,300 00 113,300 00
From the Fort Wayne branch
bank 18,641 57
From the Bedford branch bank 1,068 30 19,709 87
Milton Stapp 58 59
L. H. Scott 254 90
James Farrington 36 83 350 32
Real property and stocks not
available, (Cohen debt) 285,336 40
Interest due on the debts above
mentioned to 1st January next,
(estimated) 54,300 00
Amount actually due and owing
to the fund 1,852,019 71
Due from the fund : —
To the branches of the State
Bank of Indiana, principal and
estimated interest 529,741 31
To Wabash and Erie canal fund 32,919 70
To Lawrenceburgh and Ind'ps
railroad co 2 81
Report of Fund Commissioners, November 1, 1839 299
To William S. Hubbard 17 80
To contractors on estimates to
31st Oct. 1839 699,795 39 1,262,477 01
Leaving $ 589,542 70
wherewith to continue the prosecution of our system
of internal improvement when the foregoing balances
shall have been settled and paid.
The annual interest payable on
state bonds sold, to raise means
for the prosecution of our sys-
tem of internal improvements,
including exchange on London
for the amount payable, there
is 301,600 00
For which there is a tax now
levied of 30 cents on the hun-
dred dollars value of real per-
sonal property, taxable in the
State of Indiana, amounting in
the year 1839 to 321,000 00
Amount received from surplus
revenue fund (say) 34,000 00
355,000 00
Deduct for delinquencies and
expenses of collecting 15 per
cent on the $321,000 48,150 00 306,850 00
The state has sold bonds for the
construction of her works of
internal improvement, to the
am't of $ 5,932,000 00
all of which bear five per cent, interest per annum,
and are reimbursable in 1861, 1862, and 1863.
300 Wallace Papers
The state has sold other bonds,
to wit:
1st. On account of Lawrence-
burgh and Indianapolis Rail
Road Company 221,000 00
2nd. On account of Surplus
Revenue 294,000 00
3d. On account of the State
Bank 1,890,000 00 $ 2,405,000 00
The interest on which is provid-
ed for —
1st. By the Lawrenceburgh
and Indianapolis Rail Road
Company.
2d. and 3d. By the State Bank
of Indiana.
Recapitulation of State Bonds sold
Wabash and Erie Canal 1,727,000 00
Internal improvement 5,932,000 00
Lawrenceburgh and Indianapolis
R. R. Co 221,000 00
4th Instalment of Surplus Rev-
enue 294,000 00
State Bank of Indiana 1,890,000 00 $10,064,000 00
In laying before you the state and condition of our finances,
we regret that we cannot present to your honorable body a more
cheering prospect for future operations in our system of Internal
improvements. The large amount of State stocks thrown sudden-
ly into market for internal improvement and banking purposes
connected with the embarrassed condition of the commercial affairs
of the country, and the contraction of moneyed facilities usually
afforded, by the Bank of England; all conduce to the depression
of the prices usually obtained for state securities. But no com-
munity possessing the abundant resources of the State of Indiana,
can be long depressed either at home or abroad. Let her continue
Dowling to Noble, November 3, 1839 301
true to herself — let her consider her plighted faith as above all
price, and let her in every situation however trying, and under
all circumstances however embarrassing, resolve to protect her
honor and credit, and it is confidently believed that the time is
not far distant when her securities will be again sought for.
As intimately connected with the interest and welfare of the
State, the Board have felt great solicitude that no loss should
accrue from injury to any of her public works by their being
left in an unprotected state, and they have exerted themselves
unceasingly to procure the necessary funds to effect that object,
and they are gratified to say, not entirely without success, so that
in the unavoidable suspension of the works generally, it is believed
that means have been provided sufficient to prevent any such
damage.
It would readily occur to the Legislature that the best interests
of the State require that in the application of her resources such
works should be selected as can be finished with the least expense,
and will be most productive when completed.
Which is respectfully submitted.
Milton Stapp, )'•«,«,
T TT „ > rund Com rs.
L. H. Scott, \
John Dowling to Noah Noble1
Terre-Haute, Novr. 3, 1839
Dear Sir: I devoted Wednesday, Thursday and Friday last to
a ride along the line of the [Cross-cut] canal. . . .
. . . The Wines contracts at the summit sections are pushed
forward with great energy, and, indeed, it would seem that very
1 Noah Noble Papers, Indiana State Library. Dowling was super-
vising construction of the Cross-Cut Canal which was to extend from
the Wabash and Erie Canal at Terre Haute to the Central Canal at
Eel River in Greene County. The letter is typical of many received by
Noble after the order was given to discontinue work on the various
lines of improvement because of lack of funds. Each writer was plead-
ing for a little more time and a little more money to complete projects
that were almost finished. To abandon them would mean a loss of
302 Wallace Papers
little more is necessary to supply water power at this point
through the canal, and thereby create a competition for the wheat
of this region that must conduce much to the benefit of our
farmers. At present, the millers can keep wheat down, and
put up flour, to suit their own convenience. In this point of view
alone the speedy completion of the Cross-cut is an object of vital
importance to this region of country. Mr. Irons has his culvert
completed, and he informs me that, if permitted to go ahead, he
and his partner (Mr. Miles,) can finish their contracts by the
middle of December. Mr. Williams, when here, suggested to
him that, after he completed certain parts of his work, it would,
perhaps, be as well for him to quit, as it was probable, from the
signs of the times, that he might not get his pay for three or four
years. He says he had no opportunity of asking him if the State
would receive the work done, without withholding the per cent;
because, otherwise, he would not stop, even if ordered to do so.
My opinion is, that the little which now remains to be finished
on Irons & Miles' sections, if stopped in its present ragged and
incomplete situation, will subject the state to treble the cost at
which they can finish it, if the contractors now go on. Irons says
he will never think of returning to finish the little that now
remains. Please advise me on this point at your earliest con-
venience.
They were working on the Feeder Dam with great energy.
The force is very large, and it really seems to me, a most
splendid work. . . .
Mr. Sutherland says he only wants money enough to pay his
hands; and that, in order to accomplish this, he must have alto-
gether at least $15,000. It appears from this, that the first esti-
mate of himself and the Engineers was too low. The force is
now, and has for some time been, very great, and the difficulties
which he is compeled to encounter at every step, is such as no one
could anticipate, or realize, except from actual inspection. The
hands will be very clamorous, when the work is finished if they
much of the work already done, yet Noble was hard pressed to find any
means to continue them. All he could do was to make promises of
future payments if and when money became available.
Thanksgiving Day Proclamation, November 4, 1839 303
don't get their pay, as the Engineer and Contractor are alike
pledged in that particular. $5,000 more will therefore be
necessary.2
I am, with great respect, Yours, truly,
John Dowling
Entre nous. So low is my estimate of the character of the
burglar of Lawrenceburgh,3 that I have ceased to wonder at any
act of dishonor or meanness he, or his son in laws, or kindred, may
think proper to perpetrate against the credit or honor of the
State, particularly when they can be made subservient to their
political elevation or selfish and interested views. They would
willingly see the vessel of state go to wreck, if they could make
a pleasure boat out of the splinters.
[Addressed :] Gov. Noble, Acting Comr. Cross-cut Canal, In-
dianapolis, Inda.
Wallace : Thanksgiving Day Proclamation1
[November 4, 1839]
PROCLAMATION
By David Wallace, Governor of the State of Indiana
Whereas, the Executive authority of this State, has been re-
quested, by a large and respectable portion of the religious com-
munity, to appoint a day of general thanksgiving and prayer.
2 According to their report, the Board of Internal Improvement ex-
pected to dispense with building the locks on the Cross-Cut Canal, but
hoped to use the water power. To attain this object additional work
would be required amounting to $91,000. Some of the contracts that
had been let on the Cross-Cut were transferred to the Wabash and
Erie Canal. See below, 359, and Documentary Journal, 1839-40, Senate
Docs., pp. 35-62. In 18+7 the Cross-Cut Canal was placed under the
jurisdiction of the Trustees of the Wabash and Erie with instructions
to complete it and that part of the Central Canal which lay below its
junction with the Cross-Cut, thus making a complete route from Toledo
on Lake Erie to Evansville on the Ohio River.
3 Dowling is apparently referring to Amos Lane. See above, 268n-69n.
i Leavenworth Arena, November 14, 1839, and other newspapers.
30+ Wallace Papers
Therefore, seeing that the Supreme Ruler of the universe has
not withheld from us that divine protection and munificence, ex-
tended to other nations, but amidst many afflictions, has remem-
bered us in mercy; universal health is again restored in the land;
He has caused the labor of the husbandman to be crowned with
success by the production of an abundant harvest ; He hath averted
from us the calamities of war and of pestilence; and has per-
mitted us in a peculiar degree to enjoy our civil and religious
liberty. He has crowned with signal success the noble and
philanthropic efforts of association and of individuals for the
improvement of education, and the cultivation of the arts and
sciences; the reformation of the vicious and the increase and
spread of the Christian religion:
Now, therefore, in pursuance of said request, and of the
ancient and revised custom of our forefathers, I, David Wallace,
Governor of the State of Indiana, do hereby appoint and set
apart Thursday the 28th Day of November, instant, to be
observed throughout the State as a day of public thanksgiving
and prayer. And I do hereby recommend to my fellow citizens
on that day to refrain from all secular employment, inconsistent
with the discharge of those solemn and important duties, and to
assemble together at their usual places of public worship, and
there, in the forms consistent with the rules of their respective
churches, offer up to the Supreme Being the grateful tribute of
their hearts, for the manifestation of his divine goodness.
To invoke a continuance of His protection and favor ; to
implore his guidance in the ways of wisdom, and the paths of
virtue and morality; and to beseech Him to extend to all nations
the privileges of civil and religious liberty ; and the knowledge
and influence of the Gospel.
This was not the first Thanksgiving Day proclamation to be issued by
an Indiana governor as is sometimes stated. Governor Noble had issued
a proclamation on November 1, 1837, appointing the first Thursday in
December of that year as a day of public thanksgiving. Messages and
Papers of Noah Noble, 564. Wallace issued another Thanksgiving Day
Proclamation on October 30, 1840. See below.
Judah to Noble, November 6, 1839 305
In testimony whereof I have hereunto set my hand and caused
to be affixed the seal of the State at Indianapolis, the 4th day
of Nov. A. D. 1839.
By the Governor.
David Wallace
Wm. J. Brown, Sec'y of State.
Samuel Judah to Noah Noble1
Vincennes Nov. 6, 1839
Dr Sir — I was informed this afternoon, that no arrangement
had been made for our road between Paoli and Mount Pleasant.
I had just settled with our Branch men the terms of a loan of
$150,000 for the Road from Mount Pleasant westward — and of
$50,000 for the Wabash. But I am asked — what will be done
for the road between Mt. Pleasant & Paoli? —
I have not any answer to make, because I am utterly at a loss. —
The plain fact is — that I am utterly sick of the Political anti-
nomianism which seems to have formed the governing creed of
our governing men —
Stewart is digging on the Central Canal north of our road —
Who of the commissioners authorised this? — The work between
Mt. Pleasant & Paoli is suspended. Why is it? — Nothing has
been done on the river — wherefor is that? —
Dick Hubbard reported last session that he was authorised to
state that the interest on our loans for 1839 was provided for. — 2
Nevertheless I know that our Branch has been requested by Stapp
to make an advance toward the interest due I Deer. & 1 Jany — 3
And How is that? More astonishing yet — some time since I saw
a statement from Merril & Scott — wild enough to be sure — but
yesterday I read a letter from Stapp, backing all these men stated
1 Noah Noble Papers, Indiana State Library.
2 See Hubbard's report for the ways and means committee, January
24, 1839, above.
3 See letter of the Fund Commissioners to the president and directors
of the State Bank, November 12, 1839, below; also Stapp to Noble, Oc-
tober 23, 1839, above.
306 Wallace Papers
— and averring that Indiana had set apart $300,000 to pay her
interest for 1839. — As you well know this is all deceptive. —
I for one will not back it — I for one will not sustain the men
who may hereafter attempt to deceive the people. — I am dis-
tinctly opposed to our antinomianism — and if I am not much
mistaken the legislature will say the same at the ensuing session. —
I want a plain intelligable statement of the whole truth from
the Bank and from the Impt. Com. — I want to know who is to
blame for the continued neglect of our interests? — This all
given, I will fall back on my own reserved rights, and sustain my
friends. But the hour of humbuggery — the day of Pharisees —
antinomianism — and Jef. Evans4 — has passed.
I am sometimes half maddened when I think to myself — is it
possible that these men think me a baby — to be amused by a
bauble — an empty promise. If any so does — be assured my dear
sir, such will find at the proper time (and there is no lane with-
out its turn) that the bauble has its thorns as well as the rose —
and that the baby may sting as well as the asp.
No effort can be made, with a reasonable hope of success to
sustain the improvement party of Indiana as such. — Just think a
little, & oblige your friend
Saml. Judah
[Addressed :] Noah Noble Esq Indianapolis Ind
Fund Commissioners to the Directors of the State Bank'
Indianapolis, Nov. 12, 1839
The President and Directors of the State Bank of
Indiana:
Gentlemen — The revenue now collecting to pay the interest
on state bonds for internal improvement purposes, cannot be
■* Thomas J. Evans, the speaker of the House of Representatives at the
previous session.
1 Proceedings of the State Bank of Indiana at the November session,
1839, in State Bank Papers, Archives Division, Indiana State Library.
The related correspondence and action of the bank is also in the House
Executive Documents, 26 Congress, 1 session, Doc. 172, pp. 887-89.
Fund Commissioners to State Bank, November 12, 1839 307
realized in time to meet our interest due in London and in the
city of New York on the 1st day of January next; and there
being no funds at the disposal of the Fund Commissioners to pro-
tect the credit of the state at the coming crisis, we have to ask
of your honorable body to assist us, (in such way as you may
think most advisable,) to procure eastern funds for the payment
of the interest due on our state bonds at the time above
mentioned.
For the payment of any amount we may receive at your hands
or from others upon your recommendation, we will draw upon
the revenue of the state for internal improvement purposes (which
will shortly be in the hands of the Treasurer of State) at a short
date and will guarantee payment to be made in the same kind of
funds we receive, by the first day of April next with interest.
Enclosed we send you a statement of amount of interest to be
paid, where payable, and the means which will shortly be at our
disposal for that purpose.2
Very respectfully your obedient servants,
Milton Stapp,
L. H. Scott,
Fund Comm'rs.
2 The committee of State Bank directors to which this application
for aid was referred, reported: "That your committee feel that the
object now proposed to be accomplished, is one of paramount impor-
tance, and vital, not only to the interest of our State Government, but
also to the interest of every individual citizen. Indeed the alternative
is now presented, and either this Bank must now come forward and aid
in making this payment, or the credit of our State is gone forever, and
every door of hope for the future will be effectually closed.
"In this state of things, your committee feel there is no ground for
hesitation. This interest must be paid. We therefore recommend the
adoption of the following resolutions:
"Resolved, That, in this emergency, the several Branches of this
Bank should feel themselves called upon to respond to this application,
by every consideration of interest and patriotism.
"Resolved, That this Board do urgently request and recommend our
several Branches to come promptly to the rescue, and aid the State in
this emergency, to the full extent of their means on such security or
assurances of repayment with interest as may be satisfactory to the
Branch Boards.
"Resolved, That this Board have confidence in the ability of the
Fund Commissioners to perform their engagements, to refund on or
308 Wallace Papers
[Enclosure]
Interest due 1st January, 1839 [1840] — Payable at the Morris
Canal and Banking Company
On account of Wa-
bash and Erie
Canal $ 870,000—5—21,750
On account of In-
ternal Improve-
ments 3,832,090—5—95,800
On account of
Lawrenceburgh
and Indianapolis
Railroad 221,000—5— 5,525 $122,075 [$123,075]
Payable at the Merchants' Bank
On account of Wa-
bash and Erie
Canal $ 100,000—6— 3,000
On account of Wa-
bash and Erie
Canal $ 757,000—5—18,925
On account of In-
ternal Improve-
ments 400,000—5—10,000 $ 30,925 [$ 31,925]
Payable in London
On account of In-
ternal Improve-
ments $2,000,000—5—50,000
before the first day of April next, the money &c. to be advanced, in like
funds to that which is received from the banks." Ibid.
Calvin Fletcher, one of the bank directors, commented that "notwith-
standing it [payment of the interest] was diminishing our specie it was
deemed advisable to advance the same or the int could not have been
paid." The money was sent to New York in wagons. Fletcher Diary,
November 17, 1839.
Wallace et al. to State Bank, November 12, 1839 309
Exchange and Com-
mission 5,000 55,000
$209,000 [$210,000]
Means of Payment
State revenue estimated $260,000
Surplus revenue 22,000
Interest on Wabash canal lands 22,000 $304,000
Wallace et al. to Directors of the State Bank1
Indianapolis, Nov. 12, 1839
The President and Directors of the State Bank of
Indiana:
Gentlemen — The foregoing application of the Fund Commis-
sioners is one that demands the serious consideration of every
individual who is anxious to preserve the credit of the State; and
we earnestly hope that it may receive your favorable attention.
As officers of the State, wishing to preserve its credit, we will use
every exertion in our power to aid the Commissioners in meeting
any engagement which they may make with you to carry out their
laudable object. Very respectfully,
David Wallace,
Wm. J. Brown, Sec'y of State
N. B. Palmer, Treas'r of State
M. Morris, A. of P. Accounts.
l Proceedings of the State Bank of Indiana at the November session,
1839, in State Bank Papers; also House Executive Documents, 26 Con-
gress, 1 session, Doc. 172, pp. 887-89.
310 Wallace Papers
President of the State Bank: Annual Report1
[November 27, 1839]
To the General Assembly of the State of Indiana,
The 13th branch of the State Bank of Indiana was organized
at Michigan City in Feb. last, the first instalment having been
paid by the State and individual stock holders; and arrangements
have been made for paying the second instalment due from the
State, three months in advance, for the purpose of furnishing
additional aid to the purchasers of wheat, which is the great
staple of the Northern part of the State.
The second instalment due from the State has been paid into
the branch at South Bend, and most of the individual stockholders
have executed Mortgages as directed by the charter to secure the
State for advancing the money to be paid on their behalf. But
as no loan could be made by the State to make the payment for
the stockholders it is still unpaid.
Books for the subscription of stock in the 14th and 15th
branches, were opened in June last and the amount of stock
required by the Charter to be held by individual stockholders, was
subscribed, but the State being without the means to pay the
1 Documentary Journal, 1839-40, House Doc. No. 6. For an addi-
tional report made by Merrill on January 8, 1840, see below. The House
committee on the State Bank made a lengthy report on February 4,
1840, which included testimony taken in their investigation of the bank.
See House Journal, 1839-40, pp. 495-513, 527-627. At the close of their
report, the committee introduced a joint resolution removing Merrill
from the presidency of the bank and Calvin Fletcher and Robert Mor-
rison from the board of directors. The resolution passed the House, but
was tabled in the Senate. Ibid., 627; Senate Journal, 1839-40, p. 378.
Merrill presented a defense of the bank in answer to the charges made
by the committee. It is printed in House Journal, 1839-40, pp. 513-27.
The Indianapolis Indiana Journal (triweekly, February 7, 1840)
termed the resolution of removal an "ultra-revolutionary measure"
"cooked up in a hash of plausible theories, and metaphysical deception"
and was the result of "the recklessness and ultraism of party spirit."
Though the bank officials themselves were not partisan in politics, and
"for talent, integrity, and virtue, had no superiors in the state," yet
they were to be thrust from office. The main criticism of the bank, ac-
cording to the Journal, was that the farmers were not able to borrow
money as easily as the merchants; the paper denied this.
Report on State Bank, November 27, 1839 311
first instalment on the stock, which she is to hold in these branches,
no call has yet been made on the subscribers for their first instal-
ment.
It is a subject of deep regret that the funds authorized by the
last Legislature to be borrowed for the increase of State stock
in the Bank, have not been obtained. The organization of three
new branches and the addition of $1,500,000, to the Bank capital
of the State would have been of great advantage to its business,
materially aided its revenue and furnished our enterprising citi-
zens with banking facilities not inferior to those enjoyed in the
neighboring states. The amount of capital might have been
nominally less, according to our wealth and resources, yet as the
State is a bona fide stockholder in all the branches, and as in a
majority of them, most of the stockholders seldom borrow, it is
believed a much larger portion of the accommodations, have had
reference to the capacity for business, punctuality and integrity
in borrowers, than is usual in similar institutions.
A special report will be made at an early day by the Agent who
attempted to negociate the loan for the increase of bank capital. -
The statement at the conclusion of this report exhibits the
condition of the Bank on the 31st October, 1839, together with
a view of the result of its operations to the State. The tabular
statement of the Bank and each branch will be submitted during
the first week of the session, as required by the charter.3
The appointment of three Directors in each branch by that
part of the State Board, which is chosen by the State, has always
been viewed an important means of securing the correct manage-
ment of the branches. From the outset, it has been the practice
to select respectable men of different parties, if such were known
to exist, that an avenue might be open to hear complaints from
all quarters, if any should choose to make them, and for three
years it has been an object to appoint persons who would ask no
favors of the branches.
Semi-annual examinations of the branches have been regularly
made, and the reports of the Examiners are on file in the office of
2 See Merrill's report, January 8, 18+0, below.
3 These are not reprinted here.
312 Wallace Papers
the State Bank. No uniform mode of examining has been pur-
sued, yet enquiries have usually been made into the liabilities of
the Directors and stockholders, the security of the loans; and
whether the notes, bills, cash and deposites agreed with the
amounts charged ; and remonstrance, admonition, or the action of
the State Board has been had, in reference to matters complained
of, as the general good seemed to require.
That there are serious obstacles to the correct management
of Banks, as in every other useful and important business, must
be apparent to all who examine the subject. The great variety
of regulations prescribed by the Legislature, the numerous re-
strictions and penalties imposed, and the array of Directors and
other officers, with peculiar and minute duties allotted to each,
are evidences, that difficulties must be expected, and here, there
are some peculiar to a new country. Credit and confidence are of
slow growth, and when transplanted, they have so little strength
and firmness, that a breath of suspicion may blast them. There
would seem to be no remedy, but to investigate all complaints,
justify nothing that is wrong, and yield nothing to interested and
unfounded clamor.
When Bank stock is held for the benefit of widows and orphans,
or by farmers, merchants or professional men, retired from the
active pursuits of life, and wishing only reasonable dividends, and
they constitute or choose the Directors, there will be little liabil-
ity to error. When such men are to judge of the claims of others,
it will be as desirable to the Bank to have good customers as for
them to obtain accommodations. But in a new country, those who
ought to hold Bank stock, are few in number; and too often it is
held, not for the dividends, but to procure loans: capital is
pretended to be taken from business only for the purpose of using
more capital in that business; and Directors are chosen, who
accommodate themselves first, and then yield to the solicitations
of others with no better claims. The result of such banking can-
not well be mistaken.
Another difficulty arises from the tendency of business, and
the constant efforts of borrowers, to turn what were intended
to be temporary accommodations, into long loans. When this is
Report on State Bank, November 27, 1839 313
effected to any extent, in the same proportion, new loans cease
to be made, the Bank paper no longer issues regularly as a cir-
culating medium for the country. Those who would borrow to
carry off produce, or temporarily for other useful purposes, are
told time after time, "the bank is not discounting." And the insti-
tution, instead of resembling the unfailing fountain, which pours
a constant stream to cheer and gladden the country, becomes like
the exhausted cistern, a mere deposite for dregs.
Long loans are in general not less injurious to the borrower,
than to the Bank and the country. If they were only made while
property was rising rapidly in price, and borrowers would be sure
to sell before a fall of prices commenced, they might be more
fortunate; but all experience shows that no business men are so
unreasonable as those who have dealt long on borrowed capital,
— that success only stimulates them to incur increased liabilities;
and that the neglect to pay when money is plenty, makes the
attempt hopeless when it is scarce.
The periods during which prices rise rapidly are short, com-
pared with those in which they are about stationary or are falling;
and there can be no question that in common times, the farmer
cannot afford to pay a rent equal to the interest of the cost of his
farm and stock; nor can the merchant afford to pay interest on
what, by his credit and capital, he uses in his business. Most active
men may, with advantage, pay interest for short periods, on money
to aid their operations; but there are few indeed, who can meet
a constant drain on their income, equal to the interest of the
capital employed.
Another great difficulty in the way of useful banking is, the
accommodation loans to merchants. While the balance of trade
is against the State, the money loaned for the purchase of goods
from abroad only increases the evil. And when the merchant
borrows directly from the Bank, in the place of those who would
circulate its paper, he takes from the people the means to do busi-
ness and pay debts ; and while his sales increase their liabilities,
his policy cuts off the resources for payment. If he would give
way to the produce buyer, the manufacturer, the employer, &c,
the money loaned, after performing its proper functions among
314 Wallace Papers
the people, would in the end come to him in payment of debts.
But when he insists on being the borrower himself, his conduct is
as absurd as that of the physician, who had rather sivallow his
own drugs, than sell them for the benefit of others.
There is still another difficulty in the way of useful banking,
not less dangerous at this time, than any other. It is the spirit
of party, which carried to one extreme, would injure Banks in
the performance of their proper duties, and the enjoyment of their
just rights; and on the other, would perhaps support them in
error to use their influence for political purposes. The business of
a country can never with propriety be either the object of perse-
cution or undue favor with any of its political parties, and it is
believed this is never in fact the case with a large majority of
any party, however some of its leaders may wish to have it appear
otherwise. Unprincipled politicians may expect favor, by defend-
ing that which needs no defence, or that which deserves none ;
or they may hope by general attack and abuse to bring down all
that is above them to their own level ; and misrepresentations may
be repeated so often as to produce their effect on the public. Yet
the Bank of this State is so open to examination by its authorities,
and every thing questionable as to its being safe or profitable, and
as to its general policy, can be so easily ascertained, that it is
hoped, that nothing, which can give general satisfaction in these
matters, will be omitted. Banking cannot be conducted success-
fully without public confidence ; and if the time ever comes, when
those who manage it are not felt to be worthy of trust, and if a
change cannot be had in this respect, the Bank may struggle on,
but it will be to little purpose.
There is in the minds of many a strong feeling, that all, who
can give security are equally entitled to bank accommodations.
It is true that mere personal partiality or prejudice ought never
to influence a discount ; and that whenever persons can pay
promptly it will in general be proper to accommodate them. Yet
it is an important duty of directors to prefer such loans as will
supply a regular circulation, make produce and industry more
available, and integrity and enterprize more efficient and useful.
But if applicants for loans have no means for punctual payment,
Report on State Bank, November 27, 1839 315
all favors granted to them, which interfere with prompt loans to
others for useful purposes, are injurious to the country.
It is sometime objected to Banks that they do not furnish a cur-
rency always uniform in amount and value. Such a currency can
never be had, nor in fact would it be adapted to the constantly
changing crops and seasons and ever varying wants of human life.
All the uniformity that is practicable or perhaps desirable, is that a
bank should be prepared to make new discounts, when the business
of the country demands it. If it do this, though its circulation be
small it will still be active, and if the circulation be large and at
a distance from those for whom the bank was created, there will
still be a currency issued for their use. The purchase of bills, in
preference to discounting notes, is frequently complained of, though
there is no business of the bank more beneficial to the country
than this. When a note due the bank is paid at its counter, the
money used for the payment is taken from the currency at home.
But when bills of exchange are paid by the sale of produce in a
foreign city, or by the collection of a debt from abroad, the money
is drawn from others. A bill of exchange is sold for money to be
circulated here, and were there not more than $2,000,000 an-
nually sold, the bank would soon be drained by the debts owed by
our citizens abroad.
While it is not pretended that no errors have been committed
in the management of the bank, it can be said with confidence that
many of the branches have never knowingly transcended their
duties; that in a considerable majority of them, most of the stock-
holders seldom borrow; and where they do, they ask no favors:
that the directors generally give no preference to their own paper
over that of other business men ; that no complaint has ever
been made of the refusal of a discount on account of political
preferences, that the branches are safe beyond dispute, their
management in general creditable to the officers, and their busi-
ness useful and profitable to the country. In the instances of
improper conduct in the branches that have come before the
State board, such course has been taken by censure, restricting dis-
counts, withholding dividends, &c. as justice and good policy
appeared to require, and when other correctives fail, there will
316 Wallace Papers
be no hesitation in suspending any branch that shall persist in
error. "If the interest of the State and the safety of the other
branches require it," the remedy provided in the last resort will
be used but as other measures have so far succeeded or at least
give assurance that they will be sufficient, it is hoped that the
injury which the suspension of a branch will necessarily occasion
the public may be avoided.
From the prohibition in the charter, that directors should not
borrow, except on the same terms as others, it is evident, that it
was not intended that stock-holders should be specially favored in
their accommodations. The loan by the State to enable them to
pay their second and third instalments, has been such a favor to
them, that they come with a poor grace to ask for still more.
When they take out and keep out long loans, it is, in effect, the
withdrawal of so much stock. They contribute nothing to the
profits of the bank over six per cent, and they excite constant sus-
picion, that the institution is not managed for public good but for
individual advancement. The branches in which this stock is held
must, of necessity, be restricted in their discounts; but while
bank stock is so little in demand, it is difficult to remedy the evil
entirely. Whenever persons, who can afford to hold bank stock,
are willing to take it, the stock-holders of a different description,
may be compelled to part with it.
The high prices, which produce has borne in past years, the
losses sustained by those who have traded in it, and the general
embarrassment of the monied concerns of the country, have in-
volved a large number of the business men to a considerable ex-
tent; and many of them, who are indebted to the bank, will not
be able to make payments as fast as they had anticipated, or as
might be wished. As neither the bank nor the country can be
gainers by crowding such customers beyond their ability to bear,
when they can and will pay, if time be allowed, much forbearance
must of necessity be exercised towards them. If they cannot pay
fair instalments on what they now owe, they should not expect
new accommodations. Yet by judicious indulgence, they may and
will collect their dues from others without ruin, and the bank
and the people be saved from all losses not absolutely unavoid-
Report on State Bank, November 27, 1839 317
able, in such a change of times as is now taking place in the
country.
By an arrangement with the fund commissioners, several of
the branches have made advances on the public works, as pay-
ments became due to contractors, with the understanding that 2
months afterwards, the amount advanced should be credited to
the branch in some bank in N. York. The fund commissioners
failed to realize, according to the agreement, the loans negotiated
for the State, and the debt due from the State has since been
increased by advances to secure some of the works from destruc-
tion, and by money placed in the hands of the fund commissioners
to protect the interest and credit of the State, if it should be nec-
essary to use it.4 The sums due from the State, which cannot
be paid for a time are now considered as other debts and of course
they limit the operations of the bank, under circumstances and at
a season of the year when the demand for specie and the desire
to aid the exporters of produce, render it exceedingly unpleasant
to be thus embarrassed. Several of the branches which have made
only small advances for the State, will experience little or no
difficulty and they may during the exporting season enlarge their
discounts considerably, without any danger of being run for
specie, to any extent. Other branches may from the circumstances
referred to, and their connection with Banks, that have suspended
specie payments, be forced either temporarily to suspend or reduce
their discounts more rapidly than they have done. From no view
of the case, which the State Board had before them, at their
late session, did they feel prepared to make a special order on the
subject. They felt that, whatever is done in this matter, should
not go beyond what will be approved by enlightened and well
informed public opinion. If the officers of the Bank can be sus-
tained by this, they may and should go fearlessly forward and
conduct their business not for their own, nor for any individual
interest or benefit, but as will most promote the interests of all
creditors, all debtors and the whole community.5 But if a sus-
4 See Merrill to the editor of the Indianapolis Indiana Journal,
419n, and also letter of the Fund Commissioners to the directors of the
State Bank, November 12, 1839, above.
5 At the November meeting of the directors of the State Bank it
318 Wallace Papers
pension take place in any branch for selfish purposes, on the part
of its directors and officers; if its tendency be to occasion a
depreciated paper circulation, raising the prices of property and
aiding debtors at the expense of creditors; if any of the branches
shall pursue a course, in this respect, injurious to community and
hazardous to the other branches, and if they transact business
which will not increase their ability to resume and continue specie
payments, they will be held to a strict account for their conduct.
While the payment of specie is, in general, essential to sound
banking, there may be circumstances under which neither the
creditors of the Bank nor the public should complain of denial
or delay any more than that justice is denied or delayed, by
holding Courts only at stated periods and allowing time for
notices on writs and executions.
As to the prospects, for the future, so much depends on cir-
cumstances, that no certain calculations can be made. It cannot
be denied, that there are unfavorable indications and if these
predominate in the extreme, the results may be easily foretold.
If State character and pride be thrown away; if the currency
of the country be so much diminished that debts must be paid
in a medium made five times more valuable than that in which
they were contracted ; if the labor and productions of our citizens
be valued in a dear currency, while what they buy from other
nations is valued in a cheap one; if talents, industry, and skill
are to be useless, unless connected with hereditary wealth, no
matter what may be left to us, one universal blight will render
the whole of little value.
was decided not to order any suspension of specie payments by the
branches, but to leave it to the directors of the local branches to deter-
mine what was best to do in case of emergency. Proceedings, November,
1839, in State Bank Papers, Archives Division.
A meeting was to be held at Madison early in November to learn
the sense of the citizens regarding the Madison branch suspending
specie payments. The bank had closed its vaults against other banks,
shavers, and brokers, but those who wanted specie to buy land could
be accommodated. Indianapolis Indiana Journal, November 2, 1839.
The above policy met the approval of the editor. A partial suspension,
he thought, would be sustained, but an entire suspension would not.
Report on State Bank, November 27, 1839 319
But if the other extreme be pursued, or the best, that circum-
stances will admit of, be done; if patriotism, forbearance, and
good feeling shall unite to prevent any false step being taken ; if
the state faith be preserved inviolate in reference to its debts
abroad and institutions at home; if economy in expenditures, and
the prices of property and labor be made to conform to the
changed state of things now before us, and if the usual stimulants
to enterprise and industry be kept in operation, there would seem
to be no good reason, why the prosperity of the state may not soon
be placed on a substantial basis.
Whenever the causes of the present embarrassments are enquired
into, it will be found, that the Bank is responsible for but few
of them. It has always been the interest of the Bank to favor the
raising and exportation of produce and these interests it has not
neglected, and had the labor of the country been directed more
to these objects, as all productions of the soil have borne good
prices for the last five years, the present difficulties might have
been measurably avoided. But a different course has been pur-
sued, in which the Bank has had no concern, and which at this
moment is creating most of the difficulties that embarrass it and
its customers. When there was no surplus labor, towns and pub-
lic works have been pressed forward in all directions. It may
well be questioned whether the expenditure of money for such
purposes in a country situated as ours has been, even if the money
were donated, is not a total waste and worse than a waste, so
far as what is done will not produce such an income as other
productive property. The increased expense of private improve-
ments ; of raising produce ; and of living generally, is more than
equal to the money laid out, while it is not perceived, that an}r
one is a gainer, except by the additional value given to real prop-
erty, which in most cases is merely imaginary. The large importa-
tions of merchandise which this state of things has encouraged
have vastly increased the difficulties.
Under present prospects that industry and enterprise may not
sink into despondency, a call is made for public spirit, which
seldom appearing in prosperity, will yet come into exercise, when
320 Wallace Papers
it is really needed. All public or private works which will direct-
ly or indirectly yield a similar or greater income than other
property, should be urged at once to completion, and if state loans
can no longer be made, let the state, if no better plan be proposed,
call upon those, who are interested in these works, to complete
them at once. This can be done equitably by a board of judicious
men and with as much propriety as the owner of a lot can be made
to pay for grading and paving. The state is interested in increas-
ing its wealth, and the individuals who should be called upon have
a double interest, one the increased value of their property and
the other to prevent its depreciation and the loss of debts, which
must be inevitable if opportunities for employment be not pro-
vided, and general discouragement and stagnation prevail. Let
citizens show the right spirit, let the state be faithful to itself,
and its bank capital may be enlarged, its business prospered, its
revenues aided, its wealth and respectability vastly increased,
wide spread ruin may be avoided and we again become a united,
energetic, and prosperous people.
In the mean time, the officers of the Bank will go on, and if
their course be sustained, will discount to aid the exportation of
produce more than a million of dollars, within the next three
months, satisfied that it will be useful to the public and make
the Bank stronger and safer, under any probable circumstances.
But if they have been mistaken in their views of duty and a differ-
ent course be demanded of them, they will as soon as they are un-
deceived promptly conform to the public will in all matters which
their obligations to support the charter do not expressly prohibit.
Respectfully submitted.
S. Merrill
As it may be interesting to the Legislature and the community,
to have a summary view of the result of the operations of the
State in banking, from the commencement of the State Bank, the
following Exhibit is annexed : —
6 The statement of the condition of the State Bank on October 31,
1839, which was given here, has not been reprinted.
Report on State Bank, November 27, 1839 321
The means furnished by the State,
under the Bank Charter, are in
her bonds, bearing five per cent,
per annum, and payable in the
year 1864 $1,390,000 00
Also on surplus revenue account,
3d instalment, amount 286,751 48
Bonds for advance of 4th instal-
ment by Bank 294,000 00 580,751 48
$1,970,751 48
The resources of the State arising from the means above fur-
nished, are as follows: —
In Bank capital un-
der the charter $880,000 00
Its portion of the Sur-
plus Fund, esti-
mated 92,187 12 972,187 12
In Bank capital, from
Surplus Revenue .... 379,950 00
Its portion of Surplus
Fund, estimated .... 32,753 73 412,703 73
1,384,890 85
In mortgages taken
from stockholders.. 244,429 94
In mortgages to citi-
zens on real estate.. 720,743 92
In branches, balances 12,020 87 977,194 73 2,362,085 58
From which deduct the means furnished by the
State above 1,970,751 48
322 Wallace Papers
Leaving the amount of profit clear to the state, at
present, growing out of her banking operations
from commencement, as estimated 391,334 10
In addition to which the State has received from
the Bank and Sinking Fund Commissioners on
Surplus Revenue account, towards liquidating the
interest on the Internal Improvement debt, after
paying the interest on the $294,000 bonds issued
for the advance of the 4th instalment 77,764 02
And in tax on the individual stock for school pur-
poses 12,647 25
Making the total estimate of the nett proceeds re-
sulting to the State from the operations of the
State Bank and Sinking Fund, after paying all
interest accruing on the bonds of the State given
for banking purposes, and deducting the amount
required to satisfy the principal of said bonds, and
to return to the State the third instalment of
$286,751 48, provided the expectations of the
Bank, in the future progress of its business be
not frustrated and disappointed, subject however
to any charge which may arise on the State's
share of the surplus fund, from loss in the col-
lection of the debts due the Bank $ 481,745 37
James M. Ray, Cashier
State Bank of Indiana, Nov. 27, 1839.
Wallace: Message, December 3, 1839 323
Wallace: Message to the General Assembly1
[December 3, 1839]
Gentlemen of the Senate, and House of Representatives :
We are greatly indebted to Divine Providence, for the multi-
plied blessings dispensed during the past year, to the people of
Indiana. — Whilst other portions of the Union have been scourged
and desolated by pestilence, our fellow citizens have been per-
mitted the enjoyment of general good health ; the seasons to
them have been genial ; the earth has been most bountiful, and
yielded to the labors of the husbandman a superabundance of the
chief comforts and necessaries of life. I wish that fact and truth
would justify me in making a similar acknowledgement to those
who have for years controlled the political fortunes of this great
nation; but a deranged and ruined currency; a universal pros-
tration of credit and confidence, the deep and unmitigated pe-
cuniary distress, which is now visiting, or threatening to visit,
every class of our late prosperous community, most solemnly
forbid it. How long this state of confusion is to last, is a question
which the people only can answer; for in their hands are exclu-
sively vested the constitutional right and power to apply and
enforce the necessary correctives.2
The balance in the treasury, on the 31st of October last,
amounted to 28,702 dollars. From this sum, however, the
1 House Journal, 1839-40, pp. 14-28. The Bloomington Post (Decem-
ber 6, 1839) and the Aurora Dearborn County Democrat (December 19,
1839) thought this message was by far the best of the three delivered
by Wallace; however, the latter believed it was written by George H.
Dunn, former Congressman from Dearborn County, rather than by the
Governor. Since this was the last year of his three-year term, news-
paper editors thought it natural that he should be looking ahead to
the election in 1840, and in bidding for re-election, that he should
feel it necessary to make a strong avowal of his devotion to Whig prin-
ciples by attacking the administration in Washington. The Terre Haute
fVabasb Enquirer (December 11, 1839) considered the message common-
place, and thought many Whigs in the state — to say nothing of Demo-
crats— could have written a better one.
- The Senate and House committees to whom this portion of the Gover-
nor's message was referred made reports on January 2 and 14, respec-
tively. These are printed below.
324 Wallace Papers
fourth quarterly dues have to be deducted, which may likely
reduce it to twelve thousand dollars. Of the revenue collected
in 1838, $30,000 had not been appropriated. The legislature, by
special act, directed the treasurer to loan it out for one year, on
sufficient security, at a rate of interest not less than ten per cent.
This duty the treasurer performed, and the loans will fall due
chiefly in the month of February next. These two sums, amount-
ing to forty-two thousand dollars, together with the poll tax,
which may probably produce forty-five thousand dollars more — in
all eighty seven thousand dollars — constitute the only means pro-
vided for defraying the expenses of the State government in 1840.
A fact, the knowledge of which, must impose upon you the ob-
servance of a severe system of economy, as the disbursements, on
behalf of the State, for the two preceding years, have consider-
ably exceeded that sum. In one respect you possess a decided
advantage over your predecessors: you will have no provision to
make to meet the heavy expenditures consequent upon a revision
and distribution of the laws.
The expenses of the last legislature, including the pay and
mileage of members, amount to forty-two thousand five hundred
and sixty-three dollars and twelve cents; the public printing to
seventeen thousand seven hundred and eighty-eight dollars and
ninety-three cents; and the specific appropriations to seven thou-
sand eighty-five dollars. In relation to the public printing ac-
count, it may be well enough to remark, that about three thou-
sand dollars of it, were for news papers published at the seat
of government, and distributed by the members of the legislature
to their constituents.3
3 The cost for newspapers during the previous session was larger
than usual because there had been four papers published at Indianapolis
— Indiana Journal, Indiana Democrat, The Mechanic, and The Indi-
ana Farmer — and the legislature had provided all of them for its mem-
bers. Since that time, The Indiana Farmer had failed and The Mechanic
had been discontinued. The Governor overestimated the cost of the four
papers; as reported by the treasurer of state it was $2,349.12. The
Dearborn County Democrat (December 19, 1839) suggested that the
Governor's object in bringing up the matter was to cut off all news-
paper subscriptions, a move that would hurt the Indiana Democrat more
than the Indiana Journal, for the latter could afford to do without
this official patronage.
Wallace: Message, December 3, 1839 325
The assessments of taxable property, the present year, are
quite favorable; they exhibit most gratifying results; and prove,
beyond a question, that both the population and wealth of the
State have been steadily on the increase. The taxable polls of
1839 amount to ninety-five thousand two hundred and ninety-
one; exceeding those of 1838, six thousand seven hundred and
fifty-six. But this is evidently much below the true estimate, as
the aggregate vote cast at the late congressional election very
clearly demonstrates, — that vote being one hundred thousand and
five hundred. Indeed, I have little or no doubt, but that a close
and careful assessment would have returned not less than one
hundred and fifty thousand polls. In 1838, the total valuation
of all the taxable property of the State amounted to 97,058,094
dollars; this year, that amount has been swelled to 107,337,715
dollars — showing the year's increase to be 10,278,621 dollars.
The principal subjects of taxation, it will be recollected, con-
sist of lands and their improvements, town lots, corporation
stock, and personal property. Of these, the lands, the present
year, embracing 7,475,320 acres, have been valued at 65,984,879
[65,954,879] dollars; the town lots at 14,676,372 dollars; cor-
poration stock at 869,630 dollars; and personal property at
23,687,534 dollars. Now in the assessment of two of the fore-
going items, to wit, the lands and corporation stock, we know that
there has been displayed the grossest negligence. We know, for
instance, by referring to the reports of the commissioner of the
general land office, that 8,922,122 acres of land are subject to
taxation this year, and, of right, ought so to have appeared on
the assessment rolls; yet we find there only 7,475,320 acres, leav-
ing 1,346,802 acres untaxed. We know, too, that the private
stock in the State Bank of Indiana, alone, amounts to 1,334,050
dollars, between four and five hundred thousand dollars more
than the whole amount of corporation stock returned. Besides,
there are the stocks of the savings institutions, the loan offices, and
insurance companies located in many parts of the state, apparently
lost sight of or omitted altogether.
The loss which the treasury sustains in consequence of such
imperfect assessments, is truly astonishing. If, for example, we
326 Wallace Papers
add to the aforesaid 1,346,802 acres, the 229,351 acres returned
as per auditor's report, as delinquent lands, to the school com-
missioners, we then discover that 1,576,153 acres escape taxation
this year; these, at eight dollars and seventy-two cents per acre,
the average value of other lands, amount to 13,745,005 dollars;
add to this again, the 464,420 dollars, the neglected portions of
the private stocks in the State Bank and other institutions, and
we have 14,209,425 dollars of taxable property unassessed entire-
ly; which, according to the established rate, would have produced
a revenue of 42,628 dollars. Surely such things ought not to be.
This principle of taxing one man's property, and exempting that
of his neighbor is exceedingly unjust, and cannot long be tolerated
or submitted to by the people.
The state debt, created by the sale of State bonds, at various
times, for bank and Internal Improvements, amounts to 10,064,000
dollars: 1,727,000 for the Wabash and Erie canal; two hundred
and twenty-one thousand dollars for the Lawrenceburgh and
Indianapolis Rail Road Company; two hundred and ninety-four
thousand dollars for the creation of bank stock in anticipation
of the fourth instalment of the surplus revenue ; 5,932,000 dol-
lars for the system of Internal Improvements; and 1,890,000
dollars for the purpose of establishing the State Bank. From
this exhibit you will perceive that 7,870,000 dollars have been
borrowed for Internal Improvement purposes, and only 5,932,000
for the system proper. I make this distinction because the Wabash
and Erie Canal, from the Ohio State line to Terre Haute, is
provided with means, independent of taxation, to assist in its
construction ; and the two hundred and twenty-one thousand
dollars, advanced to the Lawrenceburgh and Indianapolis rail
road, are secured by mortgages on land.
From the report of the Fund Commissioners, already before
you,4 you have no doubt ascertained that out of the 5,932,000'
dollars of State Bonds sold, for the benefit of the system proper,
only 5,456,624 [4,445,625?] dollars and thirty-nine cents have
been received; leaving 1,486,375 dollars still due; that out of
4 See above, November 1, 1839.
Wallace: Message, December 3, 1839 327
the 1,727,000 dollars sold for the benefit of the Wabash and
Erie canal, only 1,553,507 dollars and twenty cents have been
received, leaving one hundred and seventy-three thousand four
hundred and ninety-two dollars and eighty cents still due. In short,
that on the entire sales of 7,659,000 dollars worth of bonds, 1,659,-
868 dollars and nineteen cents remain to be paid by the purchasers.
But although the state is bound to pay the interest on the whole
amount of Bonds sold, still, by agreement between the parties,
the interest on the 1,659,868 dollars is to be paid by the pur-
chasers, as it becomes due ; so that, in reality, the State, this year
is required to meet the interest on only about six millions of
dollars of the internal improvement debt.5
Now of the bonds sold, three hundred and ninety-four thou-
sand dollars draw six, and seven million eight hundred and thirty-
thousand dollars, five per cent, interest, payable semi-annually, on
the first of January and July. The January payment, therefore,
will amount to two hundred and seven thousand six hundred and
twenty dollars, and by adding five thousand dollars as the probable
exchange on London, it will be two hundred and twelve thousand
six hundred and twenty dollars. To meet this demand, the State
is provided with the following means, to wit :
Thirty cents on every one hundred dollars of taxable
property in the State — which we have seen amounts
to $107,337,715 dollars — deducting nine per cent, for
collections $294,000
Interest on canal lands 22,000
The excess of interest over six per cent, realized on the
294,000 dollars of bank stock created in anticipation
of the fourth instalment of the surplus revenue 8,820
Interest on the third instalment of the surplus revenue 25,180
Canal and rail road tolls 13,338
5 Wallace was slightly mixed up on his figures. From the report of
the Fund Commissioners made on December 19, 1839 (Documentary
Journal, 1839-40, Senate Doc. No. 12, p. 195), the amount remaining due
on the entire sales was $1,547,075 rather than $1,659,868. What part of
this was for the internal improvement loan is not set out.
328 Wallace Papers
From the Lawrenceburgh and Indianapolis Rail Road
Company 1 1,050
Interest due from New York Banks, as per Fund Com-
missioner's report 46,000
Total 420,388
Deduct the January payment 212,620
And there is left $207,768
to apply to the July payment.6
The amount of this balance, however, will greatly depend on
the success attending the collections of the revenue. Should there
be many delinquencies, it may possibly fall short a few thousand
dollars; but not enough, I hope, to prevent the State from ful-
filling her engagements without difficulty.
By the revenue act of the last Legislature, the levy of thirty
cents on the hundred dollars, for the payment of the State debt,
is confined to the year 1839. It will, therefore, become necessary
for you, at the present session, to provide the requisite means to
accomplish the same object for 1840. 7
6 Compare this with the figure in the report of the Fund Commis-
sioners to the Senate on January 6, 1840, below.
7 The ways and means committee of the House, on February 11,
18+0, reported a bill providing for a levy of $1.00 on each taxable poll
and 40 cents on each $100 valuation of taxable property. The House
amended the bill by inserting the rates then in effect of 50 cents for the
poll tax and 30 cents for the property.
At this point the revenue bill became hopelessly entangled with an
effort on the part of the Democratic House to dissolve the boards of
Internal Improvement and Fund Commissioners. A bill to this effect
(H. B. 324) was passed by the House but was so amended in the Senate
that the House tabled it. As an alternative the House added an amend-
ment to the revenue bill providing for one fund commissioner, Nathaniel
West, a Democrat; one member of the Board of Public Works, Noah
Noble; and two engineers, Jesse L. Williams, a Whig, and John Frazier,
a Democrat. The revenue bill so amended passed the House but was not
accepted by the Senate. A conference committee failed to reach agree-
ment. At the last moment a joint resolution was introduced in the
House by Amos Lane reviving the revenue law of 1837 (Lavus of
Indiana, 1836-37 [general], pp. 110-12) which provided for a tax levy
of only 15 cents on each $100 valuation of taxable property and a poll
tax of 50 cents. The resolution was rushed through both houses under
Wallace: Message, December 3, 1839 329
From the sales of the public lands, as reported by the commis-
sioner of the General Land Office, we ascertain, that the 8,922,122
acres of land now subject to taxation, will be augmented annually
by the following additions: in 1840, by 1,586,904 acres; in
1841, by 3,249,210 acres; in 1842, by 1,249,818 acres; and in
1843, by 320,641 acres — proving most conclusively, that in 1843,
we shall have 15,328,694 acres of taxable land. In times, there-
fore, like the present, when gloom and despondency seem to per-
vade every bosom ; when the credit of sovereign states even, can
no longer command money from abroad ; and when bankruptcy
and ruin, with their attending trains of evil, apparently hang
suspended over the great mass of the people, no citizen of Indiana,
I presume devoted to her interest, or who feels himself identified
with her prosperity and glory, can avoid receiving the foregoing
suspension of rules. House Journal, 1839-40, pp. 768, 914-15, 916-23,
977-78, 981-83, 987, 996; Senate Journal, 1839-40, pp. 451-52, 457, 474-75,
481, 482, 487, 490; Laws of Indiana, 1839-40 (general), pp. 6-10.
This, of course, meant a drastic cut in the revenue from that pro-
vided for in the original bill. The crux of the matter seemed to be
the effort of the Democratic House to get rid of Milton Stapp as fund
commissioner and the Senate determination to keep him. The Terre
Haute Wabash Express (a Democratic paper) said that the "unyielding"
Whigs in the Senate would rather lose some $200,000 in revenue than
dispense with Milton Stapp (issue of February 26, 1840). Nathaniel
West, whom the Democrats wanted to succeed Stapp, was obnoxious to
the Whigs. The Indianapolis Journal (February 20, 1840) remarked on
his habit of lounging around the legislature for the purpose of exciting
Democrats to deeds of madness and destruction. If he was made fund
commissioner, the Whigs expected that he would spend his time in
eastern cities manufacturing political capital for his party by attacking
the actions of the former commissioners.
On the last day of the session H.B. 324 dissolving the boards of Fund
Commissioners and Internal Improvement was brought up again in
the House and the speaker pro tern. (Robert M. Carleton [Dem.]), with-
out having it read and without calling the roll, announced the concur-
rence of that body in it. The Whigs in the Senate were suspicious of the
high-handed move; however, the bill which had been pushed through
was the bill as amended by the Senate. This provided for a Board of
Public Works to consist of Noah Noble and Jesse L. Williams and a
Board of Fund Commissioners to consist of Milton Stapp and the treas-
urer of state (Nathan B. Palmer). Indianapolis Indiana Journal, March
3, 1840; House Journal, 1839-40, pp. 994-95, 1004-5; Senate Journal,
1839-40, p. 512; Laws of Indiana, 1839-40 (general), pp. 51-52. See also
below, 429.
330 Wallace Papers
facts as evidence sufficient to justify him in confidently antici-
pating a safe deliverance from present and future enthralments.
Administrations may change, parties may alternately triumph,
and destructive experiments be repeated, but the soil and its fer-
tility will remain unaffected by either; it constitutes an element
of wealth which man, even in his folly, cannot destroy, and which,
when all others are swept away from him, continues in the per-
formance of its functions to cheer and support him through every
emergency. It is, therefore, matter of heartfelt gratification to
see how largely the people of Indiana are possessed of this ele-
ment ; for, combined with the untiring energy and industry which
distinguish their character, we feel that we hazard nothing in
predicting, that the wealth and resources of the State must con-
tinue to expand in despite of the most adverse circumstances.
The failure to procure funds, as we had a right to expect
from the extensive sale of State bonds, effected in the early part
of the season, has led to great and unusual embarrassments, not
only among the contractors and laborers, but also amongst the
people. The State has in consequence, fallen largely in debt to
the former, and is without the means, in possession, of discharg-
ing it. The banks, too, have advanced most liberally, and have
not yet been reimbursed. In a dilemma, therefore, so unexpected,
questions of great interest naturally present themselves. How can
the State extricate herself from present difficulties? What course
will she take to liquidate the outstanding obligations against her?
So far as the banks are concerned, a few months delay, might,
perhaps, be tolerated ; but not so with the contractors and labor-
ers; their necessities require immediate payment; and the State,
by all means, should exert herself to accomplish it. The amount
advanced by the bank, is 641,200 dollars and 17 cents, and the
amount due to contractors, 706,559 dollars. To discharge both
these debts, the State has owing to her from the New York
banks, as before stated, 1,659,868 dollars. If the contractors,
therefore, could only wait a reasonable length of time, without
absolutely ruining themselves and their creditors, I am confident
that a sufficiency must be realized, from the New York debt, to
pay all their claims. But this I fear cannot be. A remedy, con-
Wallace: Message, December 3, 1839 331
sequently, has been suggested, by the issue of State scrip, to
cover their demands, redeemable by the fund commissioners, so
soon as enough is received from the bonds already sold. Greatly
as I am opposed to such a measure, yet sooner than see the char-
acter of the State jeopardized, and so respectable and deserving
a portion of my fellow citizens ruined, I would most cheerfully
sanction it. But then let it be a last resort — when every other
rational expedient has failed.8
8 Two bills were introduced for the "relief of contractors"; one ap-
parently called for the issuance of treasury notes, the other for the
issuance of bank notes. Newspaper editors had been presenting their
views on the subject of relief measures for several months before the
discussion was transferred to the legislative halls. After considerable
debate the bill providing for treasury notes prevailed and became a
law on February 15, 1840, without the approval of the Governor, he
having retained it in his possession more than six days.
The notes were to be issued in denominations of $5.00 and $50, the
total amount not to exceed $1,500,000; the $5.00 notes could be redeemed
in one year, the $50 ones in two years, with interest at 6 per cent.
Both were receivable for tax purposes. They were to be paid to those
contractors on the public works who were willing to suspend further
operations on their contracts. A proviso was inserted that if the Fund
Commissioners should be able to procure money to pay the contractors
by other means, the notes should not be issued. Laivs of Indiana, 1839-
40 (general), pp. 17-21. There were protests against passage of the
bill in both the House and Senate.
Senator James H. Cravens said the issuance of treasury notes would
be a violation of the United States Constitution which forbade a state
to "emit bills of credit," and went on to cite various court decisions
further defining this provision of the Constitution. He felt that the sad
experience that the colonies had gone through in issuing paper currency
should be a sufficient warning. As an alternative, Cravens sug-
gested that the State Auditor issue certificates for work performed;
these would not pass as money and therefore would be constitutional.
Although no statement has been found as to why the Governor with-
held his signature from the bill, it was probably because he considered
it unconstitutional.
Senator Thomas D. Baird of St. Joseph County objected to the bill
on the grounds of expediency; he could see nothing in it less than the
prostration of the credit of the state, and the ruin not only of the honest
and suffering contractor, but also of the laborer and farmer. According
to his reasoning, to accept the treasury notes for taxes would mean
that tax money would not be available to pay the interest due on internal
improvement loans; if the state could not pay the interest, its credit
would be destroyed, then it would be impossible to borrow additional
332 Wallace Papers
But questions equally as grave and important are yet behind.
What shall be done with the public works? Shall they be aban-
doned altogether? I hope not. In my opinion, the policy of the
State, in the present emergency, should be, first, to provide against
the dilapidation of those portions of the works left in an unfinished
state; and, secondly, as means can be procured, to finish some
entirely, and complete others, at least, to points where they may
be rendered available or useful to the country. By the observance
of this policy, it is evident, that the millions already expended
would be saved ; some of the works completed ; and the rest
placed in a condition to be taken up and prosecuted at any time
hereafter, as the people may direct.9
By the internal improvement bill of 1836, ten millions of
dollars were appropriated to carry on the several works embraced
in the system. With an eye to this fact, and, on the supposition
that the expenditures shall not exceed the appropriation, I pro-
cured from the chief engineer, the following table, showing how
much of the works respectively may be completed, the value of
work done, and the amount still necessary to be done, to advance
them to certain points. It may, however, be proper to remark,
that all the calculations in the table, have been based on the
ground that the whole of the present expenditures are to be
saved: [See table on pages 334-35]
From this table we learn, first, that only $4,885,809 of the
ten million appropriation, have, as yet, been expended, leaving
upwards of five millions still to be applied ; and secondly, that by
expending about ten and a half millions of dollars, the White
funds to complete the public works to a point where they would be pro-
ductive; and if this could not be done, the entire state would suffer.
He claimed that other measures had been introduced which would have
given effectual relief not only to contractors but to the community at
large, but because they came from the minority party, they were
rejected. House Journal, 1839-40, pp. 274-76, 277-78, 291-92; Senate
Journal, 1839-40, pp. 50-51, 315-23; Indianapolis Indiana Journal, Sep-
tember 28, October 12, 25, 1839; February 20, 1840; Terre Haute Wabash
Enquirer, January 15, February 9, 1840.
For some of the problems presented in carrying out the provisions of
the act, see Noble's circular of March 23, 1840, below.
9 Efforts to define the future policy of the state regarding internal
improvements failed of enactment.
Wallace: Message, December 3, 1839 333
Water canal, the Madison and Indianapolis Rail Road, the Wa-
bash and Erie canal to Covington, the Southern end of the Central
canal to White River, the Northern end of the same canal beyond
Andersontown, and the Michigan and Erie canal from Fort
Wayne to the Summit level, may all be completed ; besides plac-
ing the other works in a condition to be prosecuted, from time to
time, as the means of the State and the wishes of the people may
authorize. If we separate the Wabash and Erie canal from the
mouth of Tippecanoe to Terre Haute from the system proper, as
being an independent work, provided for by the donation of land
from Congress, the ten and a half millions may then be made to
complete, in addition to the works named, nearly the whole of the
Northern end of the Central canal, from Martinsville to the
Wabash river.
It is not for me to dictate to you the course you are to pursue
in the present emergency. You come fresh from the people, doubt-
lessly prepared to represent their views and feelings, and to give
shape and vitality to the future policy of the State. To do this
you have the power; and, in consequence of the suspension of
operations upon all the public works, duty will imperiously com-
pel you to act. To the result, therefore, of your deliberations, I
shall look with no ordinary interest; for I stand pledged to the
people, to be governed in my action by their will and pleasure, as
they may see fit to express it, through a majority of both branches
of the Legislature. Hence, in all things involving no constitu-
tional objections, you may expect my ready concurrence, save one:
I can consent to no measure that would either destroy the credit,
or impeach the integrity and honor of the State.
For a full and satisfactory exposition of the operations of the
Board of Internal Improvement, under the modification law of
last winter, I beg leave to refer you to their and the Engineer's
reports.10
It appears that the expenses of the Board, and Engineer depart-
ment, are less this year by 15,000 dollars, than they were last,
a result attributable, of right, to the same law.
10 The report of the Internal Improvement Board is printed below.
355-75.
334
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336 Wallace Papers
The tolls collected on the Madison and Indianapolis Rail Road,
for the six months it has been in operation, amount to eight
thousand four hundred and seventy dollars ; on the White Water
canal, six hundred and twenty dollars; and on the Wabash and
Erie canal, four thousand two hundred and forty-eight dollars.
With regard to the latter work, it is greatly to be regretted, that
Ohio has been so tardy in pushing forward that portion of it,
lying within her territory. The yearly loss to Indiana in conse-
quence, is very considerable. We shall have, by expending some
one hundred and sixty-eight thousand dollars more, one hundred
and forty-four miles of this work completed, every foot of which,
however, must remain in a manner idle — almost valueless, until
we shall be enabled to communicate with Lake Erie. A knowl-
edge of these facts, it seems to me, would tend much to stimulate
Ohio to greater exertions in our behalf ; and, more especially,
when by doing so, she would, at once, render the whole of Central
Indiana tributary to her.11
11 A joint resolution was passed making it the duty of the chief
engineer to visit the Ohio capital and urge upon the officials the impor-
tance and necessity of a speedy completion of the canal east of the
Indiana state line. In the letter which Williams addressed to Governor
Wilson Shannon, he pointed out that Indiana would have her portion of
the canal completed to Lafayette, a distance of 144 miles by October,
1840, and that her investment of over two million dollars in the canal
would remain unproductive until the Ohio portion was open. He esti-
mated the aggregate trade of the area through which the canal passed
at 150,000 tons, two thirds of which would be transported on the canal,
and then went on to calculate that Ohio's share of the tolls would
amount to $175,000 annually. The resolution and correspondence are in
the Senate Journal, 1839-40, pp. 425-33, and in Documentary Journal,
1839-40, House Doc. 35, pp. 291-98.
By act of March 16, 1839, the Ohio General Assembly had authorized
their canal fund commissioners to borrow $700,000 toward completion of
the Ohio portion of the Wabash and Erie Canal. Additional amounts
of $150,000 and $400,000 were authorized in 1840 and 1841. After the
visit of Engineer Williams, a joint resolution was also passed by the
Ohio legislature in which they reviewed the various compacts between
the Federal government and the states of Indiana and Ohio regarding
construction of the canal. By the agreement ratified by Ohio in 1834,
she had agreed to construct her portion of the canal at least forty feet
wide and four feet deep and have it completed by March, 1847. Real-
izing Indiana's interest in as early a completion as possible, the resolu-
Wallace: Message, December 3, 1839 337
By a special act of the last Legislature, the Governor was
authorized to appoint one or more agents to assist him in making
further selections of land claimed by the State for the continua-
tion of the Wabash and Erie canal, from the mouth of Tippecanoe
river to Terre Haute. In the exercise of this authority, I appointed
John Vavvter of Jennings, Johnson Watts of Dearborn, William
Elliott of Wayne, and A. W. Morris of Marion as such agents.
These gentlemen in the early part of the season, proceeded to
discharge the duties assigned them and selected lands to the
amount of two hundred and twenty thousand nine hundred and
eighty nine acres, lying in the counties of Porter, Lake, Jasper,
Noble, Kosciusko, Fulton, Marshall, Miami, and in the great
Miami Reservation. The tract books and selections will in due
time be laid before you giving a detailed description of the lands,
the quality and rate, the valuation of each tract, and the names of
the settlers. — I have, also, as required by the act of Congress,
reported the same to the Secretary of the Treasury of the United
States.12
The selection which I made last year of seventy-three thousand
seven hundred and ten acres, had the effect of bringing the author-
ities of the General Government to the necessity of adopting
some definite course of action in relation to them. The Attorney
General, and the Commissioner of the general Land office, decided
in favor of the State's claim ; the solicitor of the Treasury against
it. This conflict of opinion, amongst his legal advisers, I presume,
induced the President of the United States to refer the question
over to Congress. But this step was taken at so late a period of
the session as to preclude the hope of obtaining a decision from
that body before the adjournment; the whole subject, therefore
tion urged the Ohio board of public works to give it top priority. Ohio
Acts, 1838-39 (general), pp. 68-70; 1S39-40 (general), pp. 81-83; 1840-
+1 (general), pp. 46-48; (local), pp. 200-2. Governor Bigger addressed
a letter similar to that of Williams to the Governor of Ohio on
March 7, 1841. Correspondence of Ohio Governors, in Ohio Historical
Society Library. The canal was not opened to Lake Erie until three
and a half years later, on July 4, 1843. Esarey, History of Indiana,
1 :408.
12 Not found.
338 Wallace Papers
will, as a matter of course, come up before the present Congress
among the unfinished business of the last.13
To say that we have, or feel, no interest in the result of this
decision would very properly subject us to the charge of great
want of candor. The condition of the State is such that property
so immensely valuable cannot well be treated with indifference ;
because it would tend greatly to diminish the burthens of the
people, and to further these laudable designs of improvement
so necessary to a complete developement of all our resources.
And when it is considered that the policy of the State alone, in
the prosecution of so many works, has, more than any thing else,
contributed to enhance the value of the public domain, and to
induce the sale of millions of acres that otherwise would have
remained among the refuse lands of the Government for a quarter
of a century hence, a ratification of this claim by Congress cannot,
I think, be viewed in any other light than an act of sheer justice
to Indiana.
In the event that the lands, thus selected, should be confirmed
to the State by Congress, in time for your action, I have then to
renew in behalf of the worthy and enterprising settlers upon them
the recommendation, that they have the exclusive privilege of pur-
chasing them at the minimum price to be fixed by the Legislature;
or, on failure of that, that some just provision be made to compen-
sate them for their improvements.14
13 A joint resolution was passed requesting Indiana's representatives
and instructing her senators in Congress to use all means in their power
to procure a favorable decision on the subject of granting lands for the
extension of the Wabash and Erie Canal to Terre Haute. The commit-
tee on roads and canals of the United States Senate reported a bill to
confirm to Indiana the lands selected, but it was not passed until the
following session. The report of the Congressional committee is printed
in the Documentary Journal, 1 839-40, Senate Doc. No. 17. See above,
144-46, 243-44, for earlier correspondence concerning this claim.
14 According to an act passed at this session, persons who had
squatted on these lands were entitled to the actual cash value of any
improvements they had made. If the squatter became the purchaser of
the land at a price higher than the minimum price, he would be entitled
to a credit on the purchase to the amount of his improvements. If a
person other than the squatter purchased the land, he must pay the
squatter for his improvements as well as the state for the land. Laivs of
Indiana, 1839-40 (general), pp. 30-32.
Wallace: Message, December 3, 1839 339
Since 1834 and up to the first of September 1838, the people
have purchased in Indiana, 6,961,573 acres of land: for which
they have paid into the coffers of the General Government not
less than 8,701,966 dollars — an enormous sum certainly — one
scarcely to be credited — and but for the authenticated reports of
the commissioner of the General Land Office, might well be
questioned. During the same period, there have been brought
into the State and expended for internal improvement purposes,
a little rising five million of dollars — three million less than the
amount paid out for land. My object in stating these facts is,
simply, to show the people where their money has gone to ; and
why it is that we hear from every quarter of the State the cry of
its exceeding great scarcity. The truth is, Indiana has been con-
tributing to the support of the General Government, for the last
four years, at the ruinous rate of two millions of dollars a year;
and what returns has she had for it, and for the millions paid
before?15 A refusal to make an appropriation on the Cumber-
land Road ; a veto of the Wabash appropriation bill ; a veto of the
land bill, which according to the estimate furnished to Congress,
by Mr. Whitcomb the commissioner of the General land office, in
January last, would have yielded to the state up to the 30th of
September, 1838, 2,646,7+4 dollars, enough to have enabled her
to prosecute our public works, without harrassing the people, or
bending them down under weight of the oppressive taxation. And
now that circumstances have changed ; that the wants and neces-
sities of the people are such as to call loudly for relief ; and with
a view to obtain it for them, and to diminish their taxes in future,
I respectfully recommend that our Senators be instructed and our
Representatives requested to use every honorable exertion to pro-
cure from Congress, the passage of a bill distributing the proceeds
of the sales of the public lands among the several states, accord-
ing to the principles of the bill which recently passed both Houses
of Congress on that subject.10
15 The select committee of the House, Democratically controlled, in
considering this part of the message, took strong exception to the argu-
ment expressed here by the Governor. See below, 393-99.
16 The reference is apparently to President Jackson's pocket veto in
1834 of Clay's bill for the distribution to the states of the proceeds of
340 Wallace Papers
I have before intimated that the financial concerns of the
country are, at this time, in a condition to excite universal anxiety
and alarm. A sudden blight has come over our prospects; the
active and enterprising are discouraged ; and the abundant prod-
ucts of the soil seem to have been gathered in vain. Our true
policy, without doubt is to aim at remedies for these disastrous
results rather than to enquire curiously for their causes; yet, we
may briefly hint at some of those which have contributed to our
difficulties. The gold bill for a time occasioned an unnatural
importation of specie, not in the usual way of trade, and its reflux
seems to be leaving us bare. Local Banks have been too much
encouraged at one time and oppressed at another. As the tariff
on foreign merchandise has decreased, importations have been
made to the injury of home manufacturers, and more than the
country can well pay. There have been perhaps, less industry
and economy amongst us than there should have been, and more
the sales of public lands. Clay's plan and the one advocated by Senator
Calhoun, which would give the public lands to the states, had come up
for discussion again in Congress in connection with the debate on a bill
to graduate the price of public lands. Congressional Globe, 25 Congress,
3 session, 130; Appendix, 95-97, 350.
The ways and means committee of the Senate, to whom was referred
this part of the Governor's message, reported that much as they might
have desired to see Clay's bill pass, they felt it was a subject that our
senators and representatives in Congress well understood, and that it
would be attended with no good consequence to memorialize on the
subject. They asked that the matter be referred to the select committee
of the Indiana Senate to whom Mr. Calhoun's bill had been referred.
Senate Journal, 1839-40, p. 245.
The latter committee failed to agree and presented two reports. The
Whigs were in a majority and in their report attempted to prove why
Calhoun's plan was not the best measure for Indiana; instead, they
wanted Indiana's representatives to urge a distribution of the proceeds
of the public lands among the several states in proportion to their popu-
lation, first allowing the states in which the lands lay 12^2 per cent of
the amount sold within their borders. The minority report by the
Democrats expressed the opinion that the majority listed a lot of evils
that would arise from the adoption of Calhoun's bill for which there
was no basis. They pictured Clay's bill as a "nefarious attempt to
bribe the people ... to the destruction of their blessed institutions, to
trample their constitution under foot, and to bow to the Baal of a splen-
did central government." Documentary Journal, 1839-40, Senate Docs.
Nos. 21, 24.
Wallace: Message, December 3, 1839 341
speculation in lands and lots than policy would justify. Each
one for himself must now see where he has been in error, and
few, it is hoped, are so situated that they cannot do much to
extricate themselves. But something also is looked for on the
part of public functionaries. By an encouraging tone, by main-
taining what is right and correcting what is wrong, by forgetting
petty and personal contests and aiming to maintain at all hazards
the credit and interests of the State, proper feelings and spirit
will be kept up amongst our citizens.
The medium of circulation now used in most if not all the
civilized countries with which we have intercourse is composed of
specie and paper, and, in reference to this, property has been valued,
agreements made, and debts contracted ; we cannot therefore deal
with other states and countries on equal terms, unless we have a
medium of circulation much like theirs in value. Fluctuations in
these matters are perhaps not to be avoided. Yet legislation should
aim at as much uniformity as possible, or, debts contracted in
one medium may be collected in another of far more value.
It would seem, then, to be our duty and interest to sustain by
all fair means our institutions. If, however, abuses are alleged to
exist, let them be examined and corrected. If any of those who
manage them have lost the confidence of the people, let their places
be supplied by others; and if any injurious apprehensions prevail,
let them be explained.17 If when these are done, the community,
generally, can be satisfied, our capital connected with credit may
perform its functions as heretofore. But if no confidence can be
felt that banks will be safely and prudently managed ; if they
must be so restricted, as to lose the power of being useful; if a
predominant party is seriously bent on destroying them ; it is bet-
1" The conduct of the Fund Commissioners and of Dr. Isaac Coe, in
particular, came under the surveillance of the General Assembly.
Senate Journal, 1839-4-0, pp. +0, 44, 61. The Fund Commissioners made
a number of explanatory reports regarding their business transactions.
These are printed in the Documentary Journal for this session. The
judiciary committee of the House presented both a majority and a
minority report on the liability of the Fund Commissioners and the presi-
dent of the State Bank for bonds sold to irresponsible people. House
Journal, 1839-40, pp. 272-74-, 303-5.
342 Wallace Papers
ter to give them up at once, than contend for preserving them
after they have lost their value. But before this be effected, it
may be well enough to inquire whether the ruin of the present
generation of business men and the depreciation of all property
and labor to a sixth of their present prices, will not prepare
community for wilder extravagancies than have as yet been
attempted.
The state has thus far failed to realize the advantages, which
were expected to be derived, from the addition to the bank stock
authorized at the last session. A contract was made, however, in
April last, with the Morris canal and Banking company, for the
sale of a million of dollars, in State bonds, to be paid for in ten
monthly instalments, commencing the first of September last,
which, when paid, were to be applied to the increase of the State
stock in the bank. But that company gave notice, in August, that
owing to there being no demand for State bonds, at any thing
like fair prices, the instalments could not be paid ; and, under
the circumstances, an arrangement was made to return one half
of the bonds, and indemnify the State, and secure the payment of
the other half in ten annual instalments. For particulars, I refer
you to the report of the President of the State bank who conducted
the negotiations.18
The condition of the State bank appears to be healthy. On the
31st of October last, her assets amounted to six millions two
hundred and forty thousand three hundred and twenty-eight
dollars and 25 cents, and her liabilities, to 3,493,042 dollars and
60 cents; showing an excess of ultimate assets, over and above all
ultimate liabilities, except to the State and the other stockholders
of 2,747,285 and 65 cents; at the same date she had in her vaults,
1,021,490 dollars and 18 cents in specie, and 3,124,497 dollars
in circulation.19
The measure of total suspension, recently adopted by the banks
of Pennsylvania, Maryland and other states, I am happy to say,
has not been followed by the State bank of Indiana. The board
of directors, at their late meeting, refused to authorize it; but,
18 See Merrill's report, January 8, 1840, printed below.
19 For the annual report of the State Bank, see above.
Wallace: Message, December 3, 1839 343
very properly, left the question open to be hereafter determined
according to the emergency of the moment, by the people them-
selves in the several bank districts.
Complaints, and I fear with but too much justice, are con-
stantly being made, by the people living in counties adjoining
those in which the several branches of the bank are located. They
seem to think that an equal participation in the benefits of these
institutions is denied them, from the fact, that by far the greater
portion of their funds are loaned to individuals residing immedi-
ately in their vicinity. This species of favoritism, if it does exist,
ought by all means to be avoided in future, or some decisive
measure should be taken to prevent a repetition. The bank is as
well a State as a private concern; one, in which the people are
stockholders to an amount, nearly equal to that held by individ-
uals. The advantages, therefore, if there are any, should be dis-
tributed among them as equally as the nature of the surrounding
circumstances will permit.20
At the request of Doctor Wylie, President of the University at
Bloomington, against whom, it will be remembered, charges of
mal conduct, in the administration of the affairs of that institution
had been preferred, and widely circulated through the medium of
newspapers and other channels, a meeting of the board of trustees
was called, which I attended, in the month of April last. At this
meeting the board entered into quite a labored and patient exami-
nation of all the charges, which resulted in the entire acquittal of
the accused by the unanimous vote of the members present. Indeed
the testimony so far from implicating President Wylie in the
smallest degree triumphantly vindicated his conduct throughout,
and placed him in point of firmness and integrity as an officer,
on higher ground, than the malice or envy of foes had before
permitted him to occupy. I regret to say, however, that a majority
of the board, after mature consideration, deemed it essential to
the peace, harmony, and prosperity of the University, to vacate
20 The House of Representatives appointed a committee to investi-
gate this and other complaints against the bank. Their report and
Merrill's defense of the bank appear in the House Journal, 1839-40, pp.
495-627. See also Documentary Journal, 1839-40, Senate Doc. No. 25, pp.
283-90.
344 Wallace Papers
three of the Professorships; two of these are still vacant — one
having been filled, as I have since been informed, at the September
session of the board of trustees.21
The subject of education is one of paramount interest, and
merits the first and last consideration of an American legislator.
Heretofore, preparatory steps only, have been taken to bring about
the establishment of the common school system in Indiana. The
newness of the country, the sparseness of the population, and the
demand for all the time and labor of the settler to prepare him
a comfortable home, have, thus far, forbid any successful attempt
toward accomplishing this desirable object. But the period has at
length arrived when this field may be advantageously occupied ;
when the wants and circumstances of a vast majority of the people,
are such as to justify, and even require immediate action. If we
take the census of 1830 as a criterion, we have within the limits
of the state about 272,000 minors over the age of five, and under
the ages of eighteen and twenty-one years. This number, we
know, is constantly and rapidly increasing, by means of immigra-
tion, and with it, as a matter of course, the necessity of devising
some speedy and efficient plan to ensure instruction to them all.
To effect this object, the creation of a board of public instruc-
tion would probably be the most successful, — a board whose duty
it should be to superintend the establishment of schools in every
county; to see that the funds are carefully husbanded and equi-
tably distributed; to provide competent teachers; and by public
addresses, or otherwise, to wake up and encourage the people to
21 By a resolution of the Senate, with the House concurring, a joint
commission of two from the Senate and three from the House were to
be appointed by the presiding officers of those houses, and given power
to send for persons and papers in order to inquire into the condition
of the university. They were to report their findings to the next session
of the legislature. Senate Journal, 1839-40, p. 165; House Journal, 1839-
40, pp. 337-38. A committee of the trustees made a report to the legisla-
tive committee on May 20, 1840, in which they sketched the legislative
provisions for the Vincennes and Indiana universities and the land
grants made to each. President Wylie reported to the same committee
on September 25, 1840, as to the causes of decline in the number of
students at Indiana University. Documentary Journal, 1840-41, House
Doc. No. 31, pp. 389-402; Senate Doc. No. 10, pp. 173-86.
Wallace: Message, December 3, 1839 345
lend a helping and sustaining hand in forwarding so noble an
undertaking.
That we have abundant means already provided, with which
to operate successfully and profitably on this plan, cannot, I think,
be rationally denied. According to the very able and interesting
report of Judge Kinney, prepared with great care and labor, as
chairman of the committee on education, of the last house of
representatives, we will have by 1850, in the saline fund, the tax
on bank stock, the surplus revenue, the reserved sixteenth sections
of land, the sinking fund or bank stock, the unsold saline lands,
the lands returned as delinquent to the school commissioners, a
capital rising four millions of dollars — two millions of which
are now within the absolute control, and may be applied at any
moment, by the legislature. The latter sum, therefore, judiciously
invested, may be made productive of a revenue of at least one
hundred and fifty thousand dollars per annum; enough certainly
to answer present purposes, and to ensure a safe and prosperous
beginning.22
One of the great difficulties we have at present to encounter, is
the scarcity of competent and qualified school teachers. To remedy
which, a scheme something like this has been suggested ; namely,
to authorize a separate department in the State University, under
the control of its president, devoted exclusively to preparing and
qualifying young men for the duties of professional teachers. To
the attainment of this object, the proceeds of the saline fund,
amounting to some two thousand dollars per annum, might be
profitably applied. This would enable the state to provide that
22 Various resolutions were introduced and reports made concerning
educational matters but no legislation was enacted at this session. The
education committee of the House of Representatives made a lengthy
report in which they pointed out that information was not at hand at
this time to revise the school law; e.g., they did not know the extent
and condition of the school funds, the number of schools in existence,
nor the number of pupils. School funds were not sufficient to defray the
entire expense of common schools, nor did they consider it desirable that
they should do so; part of the expense should be borne by taxation.
The committee presented a bill intended to lay the foundation for a later
revision and improvement of the school system, but no action was taken
on it. House Journal, 1839-40, pp. 3S9-96.
346 Wallace Papers
the necessary books and tuition should be furnished free of
expense, and that each county should be entitled to send one or
more of their most deserving and promising young men. Imper-
fect as is this skeleton of the plan proposed, still, I flatter myself,
that it will be sufficient to direct your attention to the subject, and
to call from your more matured and deliberate consideration a
better.23
On the subject of the state prison, I feel it my duty to remark,
that a change, or improvement of some kind, in its present system
of police, or government, is required to make it what it ought to
be — in fact what it claims to be — a place both of punishment and
reformation. If I mistake not, no steps have as yet been taken to
provide the convicts even with the means of religious instruction
— an omission, certainly, most fatal to the prospect of ever pro-
ducing in them that radical and permanent reform, necessary to
accomplish one of the chief designs of the institution. I would,
therefore, respectfully recommend the appointment of a chaplain
to the prison, who should receive a reasonable salary for his
services. For particulars in regard to the manner in which the
convicts are treated, as well as to the general police of the prison,
I refer you to the accompanying reports of C. F. Clarkson, Esq.,
herewith submitted, the visitor appointed by the executive agree-
ably to law.24
23 The president of the board of trustees of Indiana University pre-
sented a memorial to the legislature, asking for an appropriation from
the saline funds to endow a separate professorship for the training of
teachers of the common schools. No action was taken on it. Senate
Journal, 1839-40, pp. 453-55.
24 Clarkson's reports have not been found. The superintendents, Pat-
terson and Hensley, supplied a statistical report on the prisoners, crimes
committed, etc., which was printed as No. 24 of House Docs., Docu-
mentary Journal, 1839-40. The committee of the House to whom these
various communications were referred reported that from the informa-
tion they could gather, the prison was under very bad management;
the living quarters were filthy, provisions bad, the sick uncared for;
there was no regular system of discipline and sometimes the punishment
was very severe. Nothing was being done for the improvement of the
convicts either in the way of ordinary education or in moral and re-
ligious instruction. Indiana's method of leasing out the prison was con-
sidered one of the most ill-advised and pernicious in use in the United
States, and the committee asked that it be discontinued. House Journal,
Wallace: Message, December 3, 1839 347
Since the adjournment of the legislature, I have received from
the secretary of the treasury of the United States, the set of stand-
ard weights, authorised by congress, and designed for the use of
Indiana. To ensure to every county the benefit of these, some legis-
lation will be required at your hands. What this shall be, your
own good sense and intelligence will readily enough suggest.25
In consequence of receiving the appointment of United States
geologist, David Dale Owen, Esq., who, for the last two years
has been acting in that capacity for the state, declined the accept-
ance of a reappointment when tendered to him. These circum-
stances occurred so late in the season as to prevent, in my opinion,
the selection of an individual equally prepared and competent, in
time to enter upon the discharge of the duties required of him,
with any hope of adequate profit or advantage to the community
at large. The law too, creating the office, will shortly expire,
which will devolve upon you the duty of either continuing or
abolishing it altogether.2"
1839-40, pp. 833-34. No changes were made in the administration of the
prison at this session.
25 In order that a uniform standard of weights and measures might
he established throughout the United States, the Secretary of the Treas-
ury was authorized by joint resolution of June 14, 1836, to have a com-
plete set of all weights and measures, that had been adopted as standard,
sent to each of the state governors. The set consisted of the following
weights: one lb. troy, one to five lb. avoirdupois, and 10, 20, 25, and SO
lb. avoirdupois. The first eight were packed in one box, the last two in
another, and then the two containers fitted into a third for transporta-
tion. Being very delicate instruments, the inner boxes were lined with
velvet, and the weights packed so as to prevent any vibration while
en route. Instructions were enclosed about taking care of the weights.
There is no indication in the instructions or correspondence that Con-
gress expected the state to reproduce the set so that each county would
have one. Senate Documents, 25 Congress, 2 session, Vol. 6, No. 500.
The select committee of the Senate, to whom this portion of the mes-
sage was referred, reported that they were unable to form an opinion
as to the amount it would cost the state to have a set of the weights
made and delivered to each of the counties, and therefore advised that
the cost be determined before any legislation was enacted on the subject.
Senate Journal, 1839-40, p. 346. In the House a resolution was introduced
requesting the judiciary committee to report a bill for the adoption and
general use of the weights, but apparently none was introduced. House
Journal, 1839-40, p. 417.
26 The act of February 6, 1837, providing for a geological survey of
348 Wallace Papers
Every year furnishes fresh developements of the mineral
resources of the state; and the enterprise of our citizens is rapidly
drawing from them the means of increasing their wealth and capi-
tal. Within the last year, in addition to the Mishawaka establish-
ments, works have been erected at Rochester in Fulton county,
where bar iron of the first quality has been successfully manufac-
tured ; and ore abstracted from mines apparently inexhaustible, and
certainly of the richest kind. We may, therefore, look to St. Joseph
and Fulton counties as being able, by proper encouragement, in
a short time, to supply a good portion of Indiana with the indis-
pensable articles of iron and castings.
The period for again taking the census of the state, with a
view to another apportionment of senators and representatives,
having arrived, your attention to the subject is respectfully
solicited.
I take pleasure in laying before you, according to request, joint
resolutions of the legislatures of Maine, New Jersey, North Car-
olina, and Missouri, on the subject of the public domain;27 also
the state, expired at the close of the year 1838; a second act, dated
February 16, 1839, extended the survey for a year. David Dale Owen,
of New Harmony, had been appointed to make the survey in March
of 1837 and 1838, and then in June, 1839. Record of Executive Com-
missions, 1837-1845, p. 650, in the Archives Division. The House com-
mittee on ways and means considered it unnecessary to repeal the law
of 1839 inasmuch as it would expire on February 18, 1840. House
Journal, 1839-40, p. 228. The Indianapolis Indiana Democrat (December
12, 1839) accused the Governor of deliberately delaying Owen's reap-
pointment until June in order to give him time to accept another posi-
tion, which he did. This delay was believed to be due to the fact that
the geologist was a brother of Robert Dale Owen, a prominent Demo-
crat. However, the latter refused to believe this. Robert Dale Owen to
M. R. Southard, December 12, 1839, in Southard Papers, Indiana State
Library.
27 The North Carolina resolutions mentioned here were no doubt sim-
ilar to those received a year later which expressed the feelings of the older
states regarding the public domain. They held that each state possessed
an interest in the public domain in proportion to its population, and
any move made by Congress to distribute the proceeds received from
the sale of public lands on any basis other than that of population
should be condemned. North Carolina Laws, 1840-41 (local), pp. 105-6.
The Missouri resolutions, on the other hand, were expressive of the
feelings of the western states which would benefit very little from a dis-
Wallace: Message, December 3, 1839 349
joint resolutions of the state of Ohio, on the Maine boundary ques-
tion ;28 and also, a communication from his excellency the gover-
nor of New York, transmitting a law of that state, entitled "an
act to authorize the arrest and detention of fugitives from justice
from other states and territories of the United States," which I
recommend to your special consideration. In addition to the
foregoing, I submit to you the resolutions of the legislature of
Kentucky, responsive to those passed by the legislature of Indiana,
at the last session, on the subject of slavery.
The defeat of the Cumberland road bill in Congress, at the last
session, caused great dissatisfaction among the people both of
Indiana and Illinois. For the purpose of expressing their chagrin
and disappointment at this result, and of adopting measures in
relation to the further prosecution of the road, a convention of
delegates from these states and Ohio, assembled at Terre Haute
on the eighth and ninth of July. A copy of the proceedings of
this body has been furnished me by the president, and I most
tribution of proceeds on the basis of population. They believed a reduc-
tion in the price of public lands, or a graduation in price according to
their value, was absolutely necessary if the new states were to attract
emigrants. They also deprecated the attempts being made to connect
the land question with party politics. Missouri Laivs, 183S-39, pp.
341-42.
A year later the Governor of Indiana received resolutions from Ken-
tucky on the same subject. They were similar to those of North Carolina
so far as the distribution of proceeds from land sales was concerned
and dissented with any proposal to cede the public lands to the states
wherein they lay.
The Indiana General Assembly took no action on the resolutions.
28 The northeastern boundary line of the United States and Canada
as set out by the Treaty of Paris in 1783 was vague and remained in
doubt despite various efforts to establish it. Residents of Maine had pre-
cipitated a border conflict early in 1839, known as the Aroostook War.
The line was finally established peacefully in 1842 by the Webster-
Ashburton Treaty.
The Indiana legislature passed a joint resolution concurring in the
Ohio resolution which approved of the prompt and energetic action
taken by the authorities of Maine to protect their rights and the honor of
their state and the United States, and gave their full and hearty assent
to the act giving the President ample power and means to protect the
United States from the calamities of war. Should war come, they
tendered their means and resources to the Union. Laivs of Indiana, 1839-
40 (local), pp. 249-50; Senate Journal, 1839-40, pp. 341-42.
350 Wallace Papers
cheerfully comply with the request contained in one of the reso-
lutions, and submit the same to the consideration of the
legislature.29
The improvement of the navigation, and particularly the
removal of the obstructions at the falls of the Wabash river,
continues deservedly to enlist the feelings and interests of the
people of that rich and fertile valley. The tardiness with which
operations have been carried on there, receives their marked dis-
approbation, and gave rise to a very spirited convention at Vin-
cennes, in which all the counties interested were generally repre-
sented. I regret that it is not in my power, officially, to lay
before you the result of their deliberations, as a copy of their pro-
ceedings, has not yet been furnished me. I hope, however, to
have that pleasure before your adjournment.30
29 The proceedings of the convention were printed at Terre Haute
by J. & T. Dowling. The select committee of the House of Representa-
tives, to whom this portion of the message was referred, reported that
they considered the Cumberland Road as a national work and that
Congress was obligated to carry it through to its final completion. Small
appropriations and the lateness of the season when they were made avail-
able were contributing causes to the delay in construction, while the
appointment of an unnecessary number of officers, such as engineers,
clerks, and the like, and the construction of large and expensive bridges,
as well as indecisive and poor planning and management, had greatly
increased the estimated cost. In the memorial address to Congress by
the legislature, attention was called to the dilapidated condition of the
road; a prompt and early appropriation was urged and a reform in
the mode and manner of operation. House Journal, 1839-40, pp. 307-11;
Laws of Indiana, 1839-40 (local), pp. 255-56. The last Federal appro-
priation for the road was made in 1838; in the 1840's it was turned over
to the states through which it passed for completion and upkeep. Indi-
ana, in turn, leased sections of it to private companies.
30 The proceedings of the convention, held October 24, were printed
in the Vincennes Western Sun & General Advertiser, November 9, 1839.
The various steps taken over the years for the improvement of naviga-
tion on the Wabash River were traced together with the appropriations
made by Indiana and Illinois toward the project and the amount actually
expended, Congress having turned a deaf ear to request after request
for help. Statistics were given on the amount of shipping to show the
importance of the river to the economy of the state. Before adjourning,
the convention requested the legislatures of Indiana and Illinois to have
a survey and estimate made of the probable cost of removal of obstruc-
tions from Delphi to the grand rapids; also requested was an explana-
tion of why appropriations that had been made toward the improvement
Wallace: Message, December 3, 183<J 351
The importance of the harbor of Michigan City, and the extent
of the commerce of northern Indiana cannot, perhaps, be better
exemplified, than by giving you a statement of the business trans-
acted at that point, during the past year. There have been, it
seems, four hundred and twenty-three arrivals and departures of
vessels of various descriptions, there have been shipped 272,400
bushels of grain, and 10,368 barrels of flour, besides large
amounts of pork, and other articles, of which no exact account has
been kept. During the same period, there have been unshipped at
the same place 1,850 tons of merchandize, valued at 750,000
dollars, and 9,000 barrels of salt. In addition to all this, the
necessity of improving the harbor as speedily as possible, is
strongly demonstrated from the fact that within the three weeks,
next preceding the 23rd of November, ten vessels have been
stranded in its vicinity, and the cargoes of some of them, consisting
of wheat and flour, entirely lost to the owners. On this account,
perhaps, it would be well enough to urge the attention of Congress
to the subject, and to request a sufficient appropriation to render
the harbor at once a safe and fit receptacle for the shipping of the
lake.31
Before closing this communication, I hope I shall be pardoned
for again alluding to the pecuniary distresses of our fellow citi-
zens. A remedy of some kind is called for — is absolutely neces-
sary— if not to relieve, at least to protect their property from
the most appalling sacrifices. The suspension of the public works,
and the large arrearages due to contractors and the banks, which
the State has thus far failed to discharge, will, unless some scheme
of navigation had been withheld. Very little was accomplished in 1839
toward the improvement of navigation on the river. See report in
Documentary Journal, 1839-+0, Senate Docs., pp. 75-86.
31 A memorial and joint resolution of the legislature pointed out
that from information received from Lieut. P. B. N. Stockton, superin-
tendent of public works at Michigan City, some 1,700 feet of pier had
been constructed on the east and west sides of Trail Creek with the
$110,000 thus far appropriated by Congress toward construction of a
harbor at Michigan City. Timber was on hand for building a break-
water and a dredging machine had been constructed. A further appro-
priation of $100,000 was requested of Congress to extend the piers and
construct the breakwater. Laws of Indiana, 1839-40 (local), pp. 250-52.
352 Wallace Papers
of safety be devised, be the ruin of thousands. The people have
been looking to these funds and the banks, as they had a right to,
to furnish them with the requisite means of paying their debts
and taxes. A doubt of the State's ability to meet her engagements
punctually never, I suppose, entered their imaginations; or, per-
haps, they would have displayed more caution in the extension of
their obligations. But great as has been their disappointment,
and desperate as appears their condition, yet in no instance — to
their credit be it told — have we seen the slightest disposition
manifested to have their property sheltered under the wing of
stay or replevin laws. All they ask is, that it may, in the payment
of their debts, bring, if not the full, at least a reasonable propor-
tion of its value. And surely a fairer request could not well be
made by one man of another. If loss is to [be] sustained, the
debtor proposes to bear it; if profit accrues, he yields it to the
creditor; and in no event does he ask the creditor to be the loser.
I hope, therefore, that all safe, correct, and constitutional
expedients may be resorted to by you, to shield our fellow citizens
from the dangers and losses which now appear to threaten them.
Were their creditors disposed to be lenient, and give time, all
would ultimately be safe. For time to them now is of incalculable
value : they want time to economize ; time to accommodate them-
selves to this sudden and unlooked for change of circumstances ;
time to settle and arrange their business; and time to convert their
surplus produce into money. If they can be favored in this respect,
I have no doubt of their ability, in one or two years, to disenthral
themselves completely from the chief of their present embarrass-
ments.32
David Wallace
Indianapolis, December 3, 1839
3- The legislature gave a measure of relief to debtors by amending
the act subjecting real and personal property to execution so as to give
a stay of execution of twelve months on all judgments rendered by the
courts for a period of one year following March 1, 1840. Persons taking
advantage of this stay were required to procure one or more securities,
and acknowledge themselves as bail for the payment of the judgment,
and if they neglected or were unable to give bail, their property would
be sold without delay. Laws of Indiana, 1839-40 (general), pp. 49-51.
Wallace to the Speaker of the House, December 4, 1839 353
Wallace to the Speaker of the House1
Executive Department, December 4, 1839
Hon James G. Read, Speaker of the House of Representatives:
Herewith I return to the House of Representatives, a bill to
incorporate the Harrison Insurance Company, which passed both
Houses of the last General Assembly.- My objections to it are,
first: that it contains no limitation, as to the amount of interest
which the Company may exact; and, secondly, that there is no
power reserved to the Legislature, to amend or annul it at any
time hereafter. All of which I respectfully request may be sub-
mitted to the consideration of the House.*5
David Wallace
Wallace: Appointment of Private Secretary1
Hon. David Hillis, President of the Senate,
Joseph M. Moore is appointed private Secretary, and is author-
ized to make communications from this Department to the
Senate.2
David Wallace
Executive Department, Dec. 4th, 1839
The bill to abolish imprisonment for debt, which had failed to pass at
the previous session of the General Assembly, was re-introduced but
did not pass. Not until two years later was such a measure enacted.
Laws of Indiana, 1 841-4-2 (general), pp. 68-70.
i House Journal, 1839-40, pp. 36-37.
2 According to Art. IV, Sec. 22 of the Constitution of 1816, if the
Governor did not return a bill presented for his signature within five
days, it would become a law without his signature; however, if the legis-
lature should adjourn within this time, the Governor could return the
bill within three days after the beginning of the following session;
otherwise it would become a law.
3 The committee on corporations, to whom the bill was referred upon
its return to the House, recommended that it not pass. House Journal,
1839-40, pp. 17, 101.
i Senate Journal, 1S39-40, p. 15.
2 Moore, a cousin of James M. Ray, was later to edit The Spirit of
'76, a campaign paper published in 1840 by the Indianapolis Indiana
354 Wallace Papers
Lucius H. Scott to President of the Senate1
Office Fund Commissioners,
Indianapolis, Dec. 18, 1839.
Hon. David Hillis, President of the Senate,
Sir — 1 have the honor herewith to transmit a copy of a letter
from Milton Stapp, Esq., Fund Commissioner, in relation to the
debts of the State — please lay it before the Senate.
Your obedient servant,
L. H. Scott, F. C.
[Enclosure]
New York, Dec. 11, 1839.
Dear Sir — The outlines of a settlement with the Morris
Canal and Banking Company is agreed upon, and Mr. Biddle
and myself go to Philadelphia to night to try and consummate
the agreement. He has to get from the United States Bank
$100,000 of Beers' certificate of deposite, in order to consummate
the matter; this he thinks he can do. He gives me Beers' certifi-
cate of deposite; due 1st January next $50,000; due 1st July
next, $50,000; due 1st January 1841, $196,000. He gives me
Morris Canal and Banking Company Post Notes for half the
balance of the principal due in equal payments 1st April, July,
Oct. 1841, and January 1842. For the balance he gives Morris
Canal and Banking Company notes due 1st January, March,
May, July, September, and November, 1841 ; which may be
renewed twelve months by giving farther security, provided stocks
will not then sell at a fair rate. He gives their post-notes for
the interest due in January and July each year, until the whole
is paid. He gives me divers stocks for security. I do not think
the security entirely ample, but it is the best that can be done.
I think Mr. Merrill and they will settle.
Very respectfully,
(Copy) Milton Stapp
Journal. The Indiana Democrat made fun of the appointment, saying
Moore was once a cobbler. Dunn, Greater Indianapolis, 1:389, 486;
Indianapolis Indiana Journal, January 4, 1840, p. 1.
i Senate Journal, 1839-40, pp. 78-79.
Report of Internal Improvement Board, December, 1839 355
State Board of Internal Improvement: Annual Report1
[December, 1839]
Report to the General Assembly of the State of Indiana:
The supervision of the public works of the state, being placed
in the hands of the new Board, created by the late modification
act,2 the preparation of the 4th annual report devolves upon them ;
and in conformity with usage, and in obedience to law, the Board
beg leave to submit for the examination of the General Assembly,
a summary, yet somewhat detailed account of their proceedings.
On the 4th of March last, the day appointed by law for the
organization of the new Board, the members met at the seat of
government, and having each given the requisite bond, and taken
the oath of office, they organized and proceeded to business.
Noah Noble was elected President of the Board, and James
Morrison was appointed Secretary, with a salary of six hundred
dollars per year.
The reorganization of the several corps of Engineers was
commenced, by the nominations made by the Chief Engineer, in
the grade of Reside/its, in which grade there has been a reduction
of four — diminishing that branch of the expense at the rate of
$6,000 per year. To afford the Chief Engineer time to fill up
the corps on as cheap a basis as the public service would permit,
the nominations below the grade of Resident, were deferred until
the June meeting of the Board, at which time the organization
was completed.
The superintendence of the various works was apportioned
among the several members of the Board, as follows:
To Samuel Lewis, the work on the Erie and Michigan canal;
the Wabash and Erie canal, including all the work on that line
to Covington; the work on the Indianapolis and Lafayette
M'Adamized road from Crawfordsville to Lafayette; and the
duties pertaining to the sales and collections on canal lands.
1 Documentary Journal, 1839-40, Senate Docs., pp. 13-31. The report
is undated, but it was printed in the Indianapolis Indiana Journal the
middle of December.
~ See above, 164n.
356 Wallace Papers
To John A. Graham, the Southern Division of the Central
canal ; the New Albany and Vincennes road ; the improvements
at the Rapids of the Wabash ; and the work on that part of the
Jeffersonville and Crawfordsville road, between Salem and New
Albany.
To Noah Noble, the Cross-cut canal ; the Jeffersonville and
Crawfordsville road north of the National road ; the Northern
Division of the Central canal ; the Madison and Indianapolis
Rail-road ; and the White- Water canal.
On referring to the law under which the new Board was cre-
ated, for a specification of the duties imposed upon them, the
authority given for their execution, and the objects to be attained
by its enactment, the Board found them of a highly responsible,
difficult, and delicate character; and more so, as many of the
provisions of the act are so obscure and ambiguous, as to mislead
especially those unacquainted with the condition and the amount
of work under contract; and thereby create expectations not to
be realized. Taking the sections of the act separately, the object
would appear to be that expressed in the title — "to modify" the
system so far as to have finished at once, a portion of the works;
and in looking for the powers and means to be employed for the
accomplishment of so desirable a purpose, they would seem to be
given, in the discretion to be exercised in the application of the
public funds to the more prominent works, and in the privilege
of compounding, cancelling, and transferring contracts already
entered into; but when those seemingly ample powers are ex-
amined, in connection with each other, they will be seen to be so
incumbered with conditions and prohibitory clauses, as to render
them almost inoperative, and in some instances altogether so.
According to their understanding of its leading requirements,
and the powers conferred, the Board consider that the act con-
templates,
First — The reduction and restriction of the annual expenditure
to one and a half million of dollars, including superintendence
and all other expenses connected with internal improvement.
Secondly — On deciding what works shall be urged forward,
the Board is directed to apply or concentrate the public money
Report of Internal Improvement Board, Dei ember, 1839 357
upon such as will best promote the agricultural and commercial
interest, and yield a revenue to the state the earliest day, so as to
relieve the public from taxation ; but the Board are at the same
time prohibited from taking any step that would jeopardize the
final completion of the public works provided for by the Internal
Improvement act of 1836. And,
Thirdly — As a part of the means, and in furtherance of the
object — that of completing a portion of the works — the Board are
authorized to compound, cancel, or transfer the existing contracts
from one work to another, upon the condition that the contractors
would consent to it; but no transfer is allowed that will either
diminish or enlarge the appropriations made for each work in
1836.
With this view of its conflicting provisions, and with a knowl-
edge of the obstacles to be surmounted, the Board entered upon
the execution of the trusts confided to them, and from convictions
of duty, as well from a concurrence generally in the design of the
Legislature, determined as far as practicable to carry out, what
appeared to them a leading principle, that of finishing the more
important and profitable works, as early as the means placed
within their power would permit; but it was not without appre-
hensions as to the result, knowing that act to be taken for the
guidance of the Board, with its lame and conflicting provisions,
was the offspring of conflicting views and feelings in the Legisla-
ture, after a failure by that body to specify the works to be first
completed.
The first thing to be ascertained, was the amount of the liabili-
ties of the State for outstanding contracts — upon what works,
and at what points ; and the following is the result of the inquiry,
as furnished by previous reports, viz:
Amount of Contracts on Jf abash and Erie Canal —
East of Fort Wayne $ 136,542
Above Lafayette 272,178
On old line 17,781
Lock in Delphi Dam 39,167
Letting at Covington 141,065
358 Wallace Papers
If kite-water Canal —
Below Brookville 34,422
Letting above same to Cambridge 526,258
Central Canal —
Above Evansville 51,395
Last year's letting, deep cuts &c 443,744
Below Bluffs 104,010
Due on 1st lettings at Indianapolis 13,728
North of Indianapolis 370,188
Cross-cut Canal —
At Terre Haute 228,308
Erie and Michigan Canal 270,523
Madison and Indianapolis Rail Road 86,921
New Albany and Vincennes road 335,098
Jeffersonville and Craivfordsville road 155,834
Above Greencastle 77,562
Road north of Crawfordsville 77,976
New Albany to Jeffersonville 27,411
Making in all $3,414,121
With this large amount of unfinished contracts standing in the
way, scattered over seven distinct lines, and at some eighteen dif-
ferent points — one-third of them unconnected with others, the
questions suggesting itself to the Board was, how can they pay
off these contracts with one million and a half per year, (absorb-
ing the whole amount appropriated for more than two years to
come, if applied to existing contracts,) and at the same time
execute the other great object contemplated, that of lessening
taxation by finishing the most profitable works?
To this an answer might seem to be at hand, in the grant of
power to transfer and cancel contracts; but upon that, from a
knowledge of the then condition and past progress of the works,
the Board could not rely. The contracts upon the detached let-
tings and elsewhere, in many instances, were in the hands of citi-
zens of the immediate vicinity of the works, who, instead of
assenting to a postponement or transfer, would oppose any relaxa-
Report of Internal Improvement Board, December, 183'J 359
tion of operations on their favorite work; and in addition to
that feeling, the Board saw that the restrictions placed upon
them in those provisions of the act that forbid the taking of
any step that would interfere with the original appropriations
made to each work, or any thing calculated to "jeopardize" the
completion of all the works named in the act of 1836, would
prevent any valuable result from the proposition to "cancel and
transfer," when not only the assent of the contractor was first
necessary, but the terms and rate of compensation were in his
power. But whilst the board entertained these doubts, their judg-
ment approved the object of the law, their duty prompted them,
and an order was accordingly made for transfers from the Cross-
cut canal to the main Wabash line ; from the work at Covington
to the same point; from the letting north of Greencastle; from
the letting below Indianapolis to the main line of the Central
Canal north of the same place ; and from the lock contract north
of the Cumberland Road on the White-water canal, to the main
line below. The success of the efforts made in this matter, will be
found in the annexed reports from the commissioners whose duty
it was to execute the order of the Board.
The Board next proceeded to the designation of the objects,
and to the apportionment of the annual allowance of 1,500,000
dollars, and in the performance of that duty, they encountered
perplexities like those before alluded to. With that sum, unin-
cumbered with other claims upon its application, three prominent
works could have been finished in two years ; but whilst there
existed so large an amount of liabilities for previous contracts,
such a disposition could not be made, without a disregard of the
rights of contractors, so cautiously guarded by the late act ; and on
the other hand, if applied to the payment of existing contracts,
the whole amount would be exhausted for more than two years,
and the other great object, the completion of a part of the works,
would be defeated. Under such circumstances, taking the middle
ground, the Board made the following apportionment of the
annual allowance of a million and a half, giving preference to
the more important works, keeping in view, as near as could be,
the unfinished contracts on each, viz :
360 Wallace Papers
Resolved, That the acting commissioners be severally restricted
in their expenditures for the current year, to the sums and on
the works hereafter named, including every expense whatever,
to wit :
Wabash and E. Canal E. of Ft. Wayne $ 95,000
Wabash and E. Canal North of Tippecanoe 103,000
Wabash and E. Canal North of Lafayette 55,000
Wabash and E. Canal Lock at Delphi 4,000
Wabash and E. Canal Other purposes 22,000 279,000
White-water Canal below Brookville * 34,000
White-water Canal Above Brookville 240,000 274,000
Central Canal — Indianapolis 13,500
Central Canal — Andersontown 125,000
Central Canal— Noblesville 35,000
Central Canal— Martinsville 25,000 198,000
Central Canal — Evansville Div 51,000
Central Canal— Petersburgh 140,000 191,000
Cross-cut Canal 70,000
Erie and Michigan Canal 100,000
Madison and Indianapolis Rail Road 65,000
Vincennes Road 145,000
Jeffersonville to New Albany 10,000 155,000
North of Crawfordsville 30,000
Salem 70,000
Greencastle 25,000
Covington (canal) 30,000
$1,487,500
Finding the work going on at the eighteen different points, with
unfinished contracts to the amount of $3,414,000 to be paid for
as the work progressed, without driving the contractors from
Report of Internal Improvement Board, December, 1839 361
the lines by withholding the money, the foregoing application
was the nearest approach to modification and the early completion
of a part of the works, that the new Board could make. Had the
act authorized the Board to discontinue the operations upon the
less valuable works for a while, and to pay the contractors for
their disappointment and losses, upon those equitable principles
that would apply to contracts between neighbors, the board would
have made a more profitable disposition of at least $700,000 of
this year's allowance; and as it turns out it would have been
much better for the contractors; but having no such authority
delegated by the act, and the transfers being entirely at the option
of the contractors, a more profitable disposition could not be made
of the funds.
With this communication the Board will lay before the Legis-
lature the annual report of the Chief Engineer, and it will be
found to contain much useful information at so important a
crisis in the affairs of the state. . . .3
The several members in their character as Acting Commis-
sioners, having prepared a report of what has been done on the
several works in their respective districts, with all the minutiae
of their proceedings, the Board will annex them to this com-
munication. . . .4
As will be perceived, the Wabash and Erie Canal from Lafay-
ette on the Wabash, to the Ohio line, is nearly completed, requir-
ing only labor to the value of $168,000, to prepare it for naviga-
tion between those points, a distance of 144 miles, which if the
means can be provided, may be accomplished by June next. The
time for the completion of the work on this line expiring this fall,
and that being the more prominent line, it was not laid under
the same restrictions as other works, in the distribution of
the limited expenditure for the year. There is now however some
reason for the apprehension, that we are to experience a most
unexpected delay in the use of this work, and from an alleged
3 The engineer's report has not been reprinted. It is in the Docu-
mentary Journal, 1839-+0, Senate Docs., pp. [87J-126.
4 The individual reports of Noble, Lewis, and Graham are printed
in ibid., 35-86.
362 Wallace Papers
cause, which at this late hour cannot but excite surprise and regret.
It will be recollected that in the location of the line from Fort
Wayne to the Ohio state line, two levels or lines presented them-
selves ; the lower one, on the plan of taking in the Maumee river
as a feeder, which would supply the line with water beyond the
Ohio line; and the upper level, relying upon the St. Josephs as a
feeder, which would barely afford a supply in the dry season to
the state line. With a full knowledge of all this, the Engineer
of Ohio, Air. Forrer, a highly competent officer, selected the upper
level, having formed his plan for a reservoir to feed with, to a
point in Ohio where the supply was sufficient. Upon this plan
Ohio proceeded in her engagement with this state to construct
her division of the canal, and the work was accordingly put under
contract. Having assurances from the proper officers, that her
part of the canal should be ready during the next year, we have
expended money freely and largely, and have our part of the
line nearly complete. It is said however, that the plan of Mr.
Forrer has been changed since the work was let, and that a
different line is to be adopted for a distance of some twelve miles,
and that the work is to be let anew; and if so, it will require some
time for its performance. The consequence of such a step, would
be that our commerce would be locked up for some time to come,
and that the state will sustain a loss of no little importance, after
paying out so large a sum to construct our part of the work. For
a better understanding of the subject, the Legislature is referred
to the correspondence of the Chief Engineer, to be found con-
nected with his report.5
The last and the present seasons being so dry that the water
of the streams was reduced much below the measurements before
made; and the Northern Canal being dependent upon reservoirs
for support, some doubts were excited of the sufficiency of such a
supply; and it was deemed best to send a party to ascertain the
quantity before the farther prosecution of the work, the results of
which, not being yet known, will be communicated to the legis-
lature, when received. . . .6
5 The correspondence is printed in the Senate Journal, 1839-40, pp.
425-32. See also, 336n-37n.
G The chief engineer submitted the results of his surveys on January
Report of Internal Improvement Board, December, 1839 363
The Board lias to acknowledge, with a mixture of regret and
mortification, that another year has passed, without any valuable-
progress in the improvements at the rapids of the Wabash ; and
what heightens the feeling of disappointment, is the consideration
that the change in matters of finance has shorn us of the means
for renewed efforts. That work is not under the control of the
Board of this state nor of Illinois, but of the joint Commission of
the two states, acting upon their own responsibility, and not
bound by an order from either Board without the concurrence of
the other. Being an improvement interesting to an extensive and
productive district of each state, and holding in check a heavy and
valuable commerce, this Board would gladly have seen the work
go on. The Commissioner Mr. Graham, on our part, has recited
the causes of delay, in his report.7
The New Albany and Vincennes road being metalled to Paoli,
gates will be put up for the receipt of tolls ; but as there is no
law imposing penalties for evading their payment the Board will
need the aid of further legislation. Mr. Graham's report will
detail what has been done on the balance of this and the other lines
in his district.8
In extinguishing the contracts on the Cross-cut Canal, and
directing the application of the funds allotted to it, the Board
aimed at an early use of the water power, dispensing with the
locks. To attain that object additional work will be required to
the amount of $91,000.
The feeder line of the Central Canal at Indianapolis was filled
in the spring, and now supplies power for hydraulic purposes at
that point. The first dam for the Muncie town feeder and the
one at the Bluffs, will be left secure with a few days' more labor.
10, 1840. See Documentary Journal, 1839-40, Senate Doc. No. 18, pp.
231-48.
T Documentary Journal, 1839-40, Senate Docs., pp. 75-88.
8 An act for the better regulation of the New Albany and Vincennes
road was passed providing for the erection of toll gates in preparation
for the collection of tolls. Rates of toll for each ten miles ranged from
one-half cent for a hog or sheep to twenty-five cents for a coach, chariot,
or other four-wheeled pleasure carriage drawn by one horse. Laws of
Indiana, 1839-40 (local), pp. 148-53.
364 Wallace Papers
In July the navigation of the White-water Canal was per-
manently opened, and the line to Brookville is well prepared for
the winter's frosts and floods. The exposed work at Lawrence-
burgh will be placed beyond the reach of danger, if not arrested in
a few days. The bridge over the pool of the dam at Harrison is
well advanced ; and the foundations and abutments of the dams
and aqueducts above Brookville are left with strength sufficient
to withstand the dangers to which they are exposed.
By an order of the Board the Railroad has been leased for one
year from the first week in June for 60 per cent, of the receipts,
the contractors being liable for the expenses of the officers, fuel,
and other contingencies.9 The distance from the depot at the
top of the hill near Madison to Vernon, 20 miles, is performed in
one hour and a quarter. One trip is required each day, and when
the business justifies it, two trips are made per day, making 80
miles. No accident has yet occurred.
The June letting on this road covers a distance of 29 miles to
Edinburgh, the contract prices being much below former prices,
averaging for grading and bridging, about $9,874 per mile. The
whole length of line now occupied, finished and unfinished,
amounts to fifty-seven miles and a half.10
Upon the road north of Greencastle the structures and materials
will be left in an advanced and safe condition.11 For all other
details pertaining to the lines in Mr. Noble's district, the desired
information may be acquired by a reference to his report to the
Board.
The following is a condensed view of the year's operations:
Amount of work done and paid for from 1st
March to 31st Oct. is $ 986,732 14
To this add amount expended by the old Board
from 1st Dec. to 1st March 399,595 69
9 Sappington, "Madison and Indianapolis Railroad," in Indiana Maga-
zine of History. 12:237.
10 In reply to a Senate resolution inquiring about the suspension of
work contracted for in June and the subsequent re-letting of the work to
other contractors, Noble affirmed that this had been done. Senate
Journal, 1839-40, pp. 144-45.
11 This is the road from Jeffersonville to Crawfordsville which was
left uncompleted.
Report of Internal Improvement Board, December, 1839 365
Amount of work done by contractors since the
suspension and for which the state is indebted 705,000 00
Amount of unfinished contracts 1st Dec. last was 3,414,000 00
Unfinished contracts the 31st Oct. besides the
R. R. letting, a balance of 1,778,155 00
Letting on Railroad in June 285,000 00
The sums reported as paid out by the old and new Boards will
not agree with the charges of the Fund Commissioners against
the Board of Internal Improvement, because Messrs. Clendenin,
Maxwell, and Johnson have not settled, so as to include what
they paid out from 30th Nov. to 1st March, and because the
disbursements and estimates made since the 31st Oct. the time of
closing the accounts of the new Board by law, are not brought
into the report now made, but will come in under the next
quarterly report.
From the amount of contractors' claims for work performed it
will be seen that, with the suspension of the works, we have
another evil brought upon us, of no trifling magnitude; that of
being largely in debt to contractors. To guard against or prevent
its accumulation by an authorized line of conduct towards them,
would have been gratifying; but being anxious to finish their jobs
without breaking up their force, hoping every month for some
relief; having no means to pay their hands if discharged, and
in many instances being encouraged, assisted and urged on by
citizens of the vicinity, they were induced to persevere.
The Board has however, recently issued the annexed order,
with directions in an imperative shape, requiring the contractors
on all the lines to cease their operations with the exception of
those engaged in jobs that are yet to be preserved by additional
work, and with the exception of the Wabash line above Lafayette:
"Ordered, That, with the exception of the Wabash Canal
from Lafayette to the state line, and the dams on other works yet
to be preserved ; the work at Lawrenceburgh and bridge at Harri-
son ; the Public Works be immediately suspended ; and that the
Chief Engineer be requested to give the necessary orders to the
Engineers in charge of the same.
366 Wallace Papers
"And it is further ordered, That the Chief Engineer be request-
ed to take such steps as will by the first day of December, reduce
the corps of Engineers to the wants of the service under the sus-
pension which has taken place, retaining as many of them, and of
such grade as the present condition of the works may require ;
and in the meantime he is moreover requested to cause an inven-
tory of the public property of every description to be taken, and
to direct where it is to be deposited and the manner of its
preservation.
"Adopted by State Board of Internal Improvement, 18th Nov.
1839.
J. Morrison, Sec'y."
It would be an omission of duty towards them, were the Board
to fail to recommend the claims of the contractors to the early
and earnest consideration of the Legislature. With their whole
private resources invested in their work, those who are citizens
of other states cannot leave ; those who are of our own citizens
cannot engage in other pursuits; and all are indebted largely for
labor and supplies. Nor are they the only sufferers; many of the
daily laborers and farmers have relied upon their duties from
contractors, to pay taxes and other pressing demands. For these
reasons, it would seem some early and efficient measure of relief
should be afforded by the Legislature. So far as they may be
discharged, the Board is of opinion the per centage should be paid
them upon an adjustment of their accounts.12
There is another class of meritorious individuals whose claims
will entitle them to the favorable and early consideration of the
Legislature, those composing the various corps of Engineers, filling
the subordinate stations.
Owing to the suspension, the Board and Chief Engineer, from
motives of economy, have found it necessary to dispense with
them; and having rendered efficient and faithful services, the
Board freely acknowledges it ; regretting their inability at this
time to tender the promised compensation.
12 For legislation affording relief to contractors, see above, 331n.
Report of Internal Improvement Board, December, 1839 367
The Treasurer of State has laid before the Board, a notice
of the surrender of the charter of the Lawrenceburgh Railroad
Company, and the Board has considered the question of the value
of the work performed by the Company to the Canal at Law-
renceburgh ; and finding from the opinion of the Engineer Depart-
ment, that it does not, in its present condition, afford any pro-
tection to the canal, if it required it, the Board could not feel
justified in making an allowance for it, and therefore have not
made any.
Although it does not properly belong to them as disbursing
agents, yet as the act enjoins upon the Board the duty of exhibit-
ing a view of the condition of our finances, present and in pros-
pect, stating the gross means applicable to the interest on our
debts, and the sources whence derived, they have sought and
obtained information in relation to the subject from the commis-
sioners belonging to the financial department, and proceed to the
discharge of the duty required.
The whole amount of the state debt is,
For the Wabash and Erie canal $1,727,000 00
For the other works 5,932,000 00
Making 7,659,000 00
Deducting the estimated value of our canal
lands 1,000,000 00
There will remain of the debt 6,659,000 00
The annual interest on our debt, is
On that of the Wabash and Erie canal $ 87,350 00
For the other works 301,600 00
Amounting to 388,980 00
[ 388,950 00]
368 Wallace Papers
Annual means applicable to the payment of interest, are:
Revenue derived from $107,000,-
000 of assessment, at 30 cents on
the $100, making, not deducting
the cost of collection 321,000
Interest on one 3d of the Surplus
Revenue 34,000
Interest on debts due for canal
lands sold 22,000 377,000 00
Leaving, besides the loss and cost of collec-
tion, a balance to be provided for of 11,000 00
In addition to her bonds, the state owes the fol-
lowing debts:
To the Br. Banks for money advanced for the
works 660,000 00
To contractors &c. to 1st Nov 705,000 00
$1,365,000 00
And there is due to the state:
From Eastern Banks, and others, besides the
unavailable property of $285,000 1,557,000 00
Of the canal lands embraced in the estimate of $1,000,000,
about $365,000 consists of debts due for those sold heretofore,
and the remainder consists of the estimated value placed upon
the 90,000 acres to be selected from the lands recently purchased
of the Indians. Besides these, we have 294,000 acres, now se-
lected on account of the lands granted by Congress for the benefit
of the Wabash and Erie canal, below the mouth of the Tippe-
canoe, which cannot be disposed of until authorised by an act of
Congress.
The annual means applicable to that purpose being short of the
interest accruing upon the bonds, and the Board believing the
present rate of taxation as high as the assessments will justify
without making it oppressive to the agricultural interest, would
recommend the sale of the canal lands, payable annually for
seven years, with interest, and from the proceeds that the $87,350
Report of Internal Improvement Board, December, 1839 369
of interest, due on the debt contracted for the Wabash and Erie
canal, be paid. This will leave from the other sources of income
named, a sum sufficient to meet the interest on the remainder of
the debt. Until there shall be a sufficient sum received from the
sales and accruing interest, the interest from the canal lands for
the first year, to that amount, ($87,350) must be paid from the
debts due from the Eastern Banks, amounting, as above stated, to
$1,557,000, to be returned from the sales of the lands.
The Board may be told it is bad policy to apply the principal
to be obtained for the lands to the payment of interest. Looking
to the policy of the proposition, the Board will concede this; but,
looking to the necessity, and believing it would be very unsatis-
factory to the holders of our bonds to be told that we wished to
apply our lands to another object, the Board is prepared to apply
any means in the reach of the state, to save our credit and protect
our honor. With the debts due us, the proceeds of the lands,
and the present income from taxation and otherwise, we can pre-
serve our credit until other resources are at hand, and until we
can complete our prominent and more profitable works.
The Board has already stated to the legislature, that in their
order for the suspension of operations upon other lines, they have
not disturbed the progress of contracts on the Wabash canal.
That work being at the eve of completion, and requiring only the
performance of work to the value of $168,608, to render it avail-
able for the whole distance of 144 miles, it was thought advisable
not to diminish the amount of force there.
To those who reside on the other lines, and who have witnessed
the daily active exertions of the operators, the discharge of the
force employed, and the consequent postponement of the expected
facilities to commerce, cannot be otherwise than discouraging.
Similar disappointments, however, have happened to other states,
and without injury, except that produced by delay; and whilst
we cannot avoid feelings of regret for our suspension, there will
be a resulting benefit, that of the reduced price of new work cor-
responding with the decline in the leading elements of cost, labor
and provisions, to say nothing of the opportunity that will be
offered the legislature to confine the future application of our
370 Wallace Papers
means to the more useful works first, taking time for the com-
pletion of others.
When we shall be able to renew operations upon a prudent
scale, will depend in some measure upon circumstances not in
our control, but from the long rest the people of Europe have
had from the desolations of war, and the vast accumulation of
wealth to fill the channels of business, there must, when the effects
of the revulsion shall have subsided, be a surplus of capital to
be again invested in American bonds; and when, in connection
with this view, we look to our state and her resources, to the
public spirit, enterprise, and perseverance of her citizens, to the
elasticity and energies of both, with such a people, such a soil,
such resources, present and in prospect, the day cannot be remote
when the gloomy picture held to our view, must give way to
brighter prospects, and then, like the states preceding us, we
must and will triumph over the difficulties thrown in our path
by the pervading evil of the times.
By a reference to the table attached to the report of the
Engineer in Chief, the legislature will perceive that 404 miles
of the advanced works may be finished with a further expendi-
ture of two millions, and that with an additional sum of one and
a half million, one hundred miles more may be completed.
Although the Board thought it advisable to discontinue opera-
tions for the present, and until the legislature should have an
opportunity to act in reference to the subject, they are of opinion,
if at all practicable, that one at least of those approaching to
completion, should be taken up in the spring. And 
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